India: Is an RBI rate hike expected if CPI exceeds 6%? – Commerzbank

Inflation pressures point to further RBI rate hikes, with Commerzbank Research forecasting that India’s October CPI inflation will exceed 6% year-on-year on the back of elevated oil prices, robust domestic demand and an adverse base effect. According to the report, RBI’s projections show inflation remaining close to the upper end of its target band through mid-2027. Nearly 90bp of cumulative tightening by February 2027 is implied by OIS pricing.

Will sticky inflation keep RBI on a tightening path?

"It is expected to climb further and could well exceed 6% you compared to 5.5% in September."

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"More worryingly for RBI, this low base effect will persist into November and December, which is likely to keep inflation elevated above 6.0% throughout Q4 2026."

"In the October review, RBI projected inflation at 6% in Q4 2026, and for it stay firm for the next two quarters, at 5.7% in Q1 2027 and 5.6% in Q2 2027."

(An editor reviewed this article, which was produced with assistance from an Artificial Intelligence tool. Find out more.)