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RBI to Hike Rates 25 Bps in Oct, Dec; Nomura Sees Terminal Rate at 5.75%
M
Moneycontrol•28-09-2026, 09:17
RBI to Hike Rates 25 Bps in Oct, Dec; Nomura Sees Terminal Rate at 5.75%
- •The Reserve Bank of India is expected to raise the repo rate by 25 basis points in October and another 25 bps in December, according to Nomura.
- •Nomura forecasts the terminal rate to reach 5.75% as a "preemptive recalibration to anchor expectations."
- •The brokerage believes this rate hike cycle will be less aggressive than market expectations, assigning an 80% probability to 25-50 bps of hikes.
- •Nomura highlights moderated trend inflation in India, no signs of broadening inflation, and signals of below-trend growth ahead.
- •Food inflation is identified as the biggest risk to the near-term inflation outlook, with CPI inflation expected to rise to 6.3% in Q4 before moderating.
Key Questions Answered
Nomura expects the Reserve Bank of India to raise the repo rate by 25 basis points in both October and December, bringing the terminal rate to 5.75% as a preemptive recalibration to anchor expectations.
Nomura projects CPI inflation to rise from 4.8% year-on-year in August to 6.3% in Q4 and around 5.3% in H1 2027, before cooling below 4% in H2 2027, with full-year averages of 5.2% for FY27 and 4.0% for FY28.
Nomura's India Composite Leading Index declined to 99.8 in Q4 2026 from 100.5 in H1 2026, pointing toward the possibility of below-trend economic growth ahead.
