RBI may raise repo rate by 75-100 bps in current cycle: Report

The report said the Monetary Policy Committee’s 25-basis-point repo rate hike and its shift in stance from “Neutral” to “Calibrated Tightening” signal a stronger focus on containing inflation. It expects the policy cycle to turn around in the first quarter of FY28 as the growth-inflation balance evolves.

Consumer inflation is expected to peak in the third quarter of FY27, while wholesale price inflation could begin easing from March 2027 as favourable base effects set in. Consumer price inflation is likely to trend below 5 per cent year-on-year beyond Q1FY28, the report said.

However, the brokerage flagged risks to consumption in the second half of FY27, including rising borrowing costs, subdued rural sentiment and weaker kharif sowing. It also warned that prolonged geopolitical conflicts and crude oil prices around USD 100 per barrel could sustain cost pressures.

The report noted benchmark 10-year government bond yields had risen around 70 basis points in calendar year 2026, with yields likely to remain elevated until geopolitical tensions ease and inflationary pressures moderate.

Higher interest rates are expected to support bank margins in the near term, although non-food credit growth could gradually slow towards the end of FY27. SBI Capital Markets expects FY27 to remain favourable for banks, while bonds could regain investor interest in FY28.

The report also highlighted global uncertainty, with rising yields in advanced economies and capital outflows from emerging markets adding to financial pressures. (ANI)

(This content is sourced from a syndicated feed and is published as received. The Tribune assumes no responsibility or liability for its accuracy, completeness, or content.)