JPMorgan Chase & Co chief India economist Sajjid Chinoy expects the Reserve Bank of India to raise rates at its October 5 meeting and to strike a cautious or hawkish tone signaling more tightening may be in the pipeline. Speaking with Bloomberg Television's Paul Allen, Chinoy said inflation, which averaged 2% over the past year, will run close to 6% over the next quarter and stay between 5.5% and 6% in the first half of 2026, driven by pipeline pressures, higher energy prices, global tech inflation and building El Nino pressures. With policy rates at 5.25%, he said the first 50 basis points of hikes amount to normalization or recalibration to more normal inflation, and he expects a 25 basis point hike in October followed by one more in December. He said the length of the cycle depends on whether the RBI forecasts inflation falling quickly back to 5% or below after peaking at 6% in three quarters, and on how broad-based the inflation pressures become, including whether strong demand emboldens producers to pass pipeline pressures into output prices and makes core inflation sticky. Chinoy also said the large influx of FCNR flows gives India more ammunition against a hostile global backdrop but has created a liquidity overhang that leaves monetary conditions more accommodative than interest rate levels suggest, making it important for the RBI to hike next week, signal more may come, and aggressively sterilize those flows to prevent overnight rates falling below the policy rate.
JPMorgan Chase & CoJPMorgan's India economist expects RBI to hike rates in October and December, which would support the rupee.
