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PIMCO Says Central Banks May Avoid Aggressive Rate Hikes
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News18•07-10-2026, 18:15
PIMCO Says Central Banks May Avoid Aggressive Rate Hikes
- •PIMCO reports that major central banks may not need to raise interest rates as much as financial markets currently anticipate.
- •The Reserve Bank of India recently raised its policy repo rate by 25 basis points to 5.50 percent, following similar moves by the US Federal Reserve and the European Central Bank.
- •PIMCO expects the current energy-driven inflation shock to ease, allowing global growth to remain stable as price pressures moderate.
- •The benign economic outlook depends on the energy shock subsiding, with risks remaining if Middle East conflicts escalate or inflation expectations become embedded.
Key Questions Answered
PIMCO expects that the current energy-driven inflation shock will eventually fade rather than become persistent, meaning central banks may not need to raise interest rates as much as financial markets currently price in.
The Reserve Bank of India's Monetary Policy Committee unanimously raised the policy repo rate by 25 basis points to 5.50 per cent, marking its first increase in nearly four years.
An escalation of the Middle East conflict could drive energy prices higher, and policymakers might overreact if temporary price increases become embedded in inflation expectations.
