MUFG forecasts India’s inflation at 4.4% year-on-year, pushing back expected 50bps RBI rate hikes to December 2026 amid robust growth.
India’s Consumer Price Index is projected to climb to 4.4% year-on-year from 4.3%, reflecting upward pressure on inflation. The Reserve Bank of India has signaled rates will remain on hold near term, citing inflation as largely under control.
Analysts had previously expected rate hikes sooner, but MUFG now delays its 50bps increase forecast to December 2026. Factors like strong domestic growth, accelerating credit, and fiscal expansion contribute to a hawkish bias for future policy moves.
Despite the RBI’s cautious stance, risks to inflation persist due to oil price lags, fiscal deficits, and potential weather disruptions. Markets may price in higher repo rate probabilities as data evolves.