State Bank of India suggests consecutive 25-basis-point rate increases in October and December, citing widening inflation pressures and rising consumer prices across sectors, highlighting the potential for a more aggressive monetary tightening cycle.
State Bank of India has said India’s central bank could have room for back-to-back 25-basis-point rate rises in October and December as inflation pressures spread beyond a narrow set of goods and services.
In its Ecowrap report, the lender argued that the Reserve Bank of India’s policy meetings in those two months could be a “perfect pitch” for a careful tightening move, followed by a pause to assess fresh data and the effect of dearer borrowing costs. That view reflects growing concern that price pressures are becoming more widespread, making them harder to damp down with a single policy adjustment.
India’s retail inflation, measured by the consumer price index, rose to 4.82% in August from 4.45% in July, with food costs doing much of the damage. Rural inflation was notably higher than urban inflation, and SBI said core inflation, which strips out food and fuel among other volatile items, also picked up. The bank’s analysis suggested the inflation basket has broadened sharply this year, with many more commodities now contributing to the headline figure than in January.
SBI also warned that headline CPI inflation could climb above 6.5% before easing back below 6% early next year. Separately, other market commentary has pointed in the same direction: Morgan Stanley recently brought forward its expectation of the RBI’s next tightening cycle to December 2026, while SBI Research has said the central bank should act independently of the US Federal Reserve, as it did in 2022. The wider backdrop remains uncertain, with tensions in West Asia keeping crude oil in focus; SBI said sustained oil prices above $100 a barrel could worsen transport and production costs and complicate the RBI’s balancing act between inflation and growth.
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