After a very strong first half of the year, India’s economy is set to cool but annual GDP growth should still average an impressive 7% from 2026-2028. Rising food prices on account of a weak monsoon will push headline inflation to the upper bound of the RBI’s 2-6% target range over the coming months and we think the central bank will begin a hiking cycle in the upcoming meeting in October. We expect 75bps of hikes to the repo rate to 6.00% by the middle of 2027 – a more hawkish view than the consensus.
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