The latest activity data suggest that India’s economy is slowing, but we think GDP growth should average 6.5% in 2026-27 – an enviable rate by global standards. Headline inflation nudged up to a 19-month high in July and if monsoon rainfall remains weak, further rises in inflation will follow. The RBI kept the repo rate on hold this month but we still expect the central bank to tighten policy before long. We expect 75bps of hikes to the repo rate to 6.00% by the first half of 2027 – a more hawkish view than the consensus.
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