Goldman Sachs Predicts RBI Will Hike Repo Rates Three More Times by June Amid 2027 Inflation Risks

• by Akanksha Mishra
• 2026-10-09 19:27:00

The Reserve Bank of India (RBI) is anticipated to increase interest rates three more times by June, resulting in a cumulative hike of 75 basis points, according to projections by Shantanu Sengupta, Goldman Sachs' chief India economist. Despite the expected monetary tightening, Goldman Sachs maintains a positive outlook, estimating that India's economic growth rate will remain steady at around 7%.

El Niño Threat and 2027 Inflation Outlook

While financial markets have largely focused on near-term trends, Goldman Sachs has highlighted El Niño as a major risk factor for 2027, potentially posing a greater threat to economic growth and inflation than immediate market conditions suggest:

Minimal Near-Term Impact: Economists expect the current impact of El Niño on summer (kharif) crops to be minimal, supported by healthy existing inventory levels that help keep near-term inflation in check.

Winter Crop and Stock Pressures: However, low water levels in reservoirs could adversely impact winter (rabi) crops later on. Depleting stock levels by 2027 could subsequently drive inflation higher and weigh on economic growth.

Projected Timeline for Repo Rate Hikes

Regarding the trajectory of interest rate adjustments, Goldman Sachs estimates that the RBI could implement hikes during policy reviews in December, February, and April/June. Furthermore, global commodity trends remain a critical variable, with crude oil prices projected to fluctuate between $85 and $95 per barrel. Economists warn that if crude prices consistently sustain at or above $100 a barrel, it would create a significant drag on both national economic growth and consumer price inflation. Meanwhile, corporate earnings growth for the year is anticipated to remain in the mid-teens, even as foreign investment flows experience mild deceleration with capital shifting toward artificial intelligence opportunities in international markets.

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