YES Bank's report says India's interest rate gap with G7 economies is becoming an important factor for the RBI as inflation risks rise, since maintaining a certain differential helps attract foreign debt capital while the US Federal Reserve is expected to continue its rate-hiking cycle. The RBI's October MPC minutes project inflation for the third quarter of FY27 at 6 per cent, the top of its 2-6 per cent tolerance band, while September data showed broader price increases, rising household inflation expectations and businesses passing higher input costs on to consumers. External MPC member Saugata Bhattacharya said demand pressures remained subdued, although the gap between actual economic activity and potential output was narrowing. Despite this, GDP grew 7.8 per cent in the first quarter of FY27, supported by private consumption, exports and services, while energy prices, supply-chain pressures and El Nino pose risks to growth. YES Bank forecasts a cumulative 50 basis-point repo rate hike, with 25-basis-point increases in December and February, but this is the bank's own forecast, not an RBI decision.
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A YES Bank report says the gap between India's interest rates and those of G7 economies matters for monetary policy, as it helps attract foreign debt capital while the US Federal Reserve is expected to continue its rate-hiking cycle. The minutes of the RBI's October MPC meeting show its inflation projection for Q3 FY27 at 6%, the top of its 2-6% tolerance band. September inflation rose broadly, with core and core-excluding-precious-metals inflation both up, household inflation expectations increased, and businesses were passing higher input costs to consumers. Growth remains resilient, with Q1 FY27 GDP expanding 7.8% on strong private consumption, rising exports and services momentum. YES Bank forecasts a cumulative 50-basis-point repo rate hike, with 25 basis points in December and 25 in February, though this is the bank's forecast rather than an RBI decision.
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- India interest rate gap with G7 in focus as RBI weighs inflation risks : Report
A YES Bank report says the gap between Indian and G7 interest rates matters for monetary policy, as it helps attract foreign debt capital while the US Federal Reserve may continue its rate-hiking cycle. The minutes of the RBI's October MPC meeting flagged growing inflation risks, with the Q3 FY27 inflation projection at 6 per cent, the top of the 2-6 per cent tolerance band. September data showed broader price increases, household inflation expectations rose and businesses were passing higher input costs on to consumers, although demand pressures remained subdued. India still posted GDP growth of 7.8 per cent in Q1 FY27, while the report flagged risks from energy prices, supply-chain pressures and El Nino. YES Bank forecasts a cumulative 50 basis-point repo rate increase, with 25-basis-point hikes in December and February, but this is the bank's own forecast rather than an RBI decision.
- India interest rate gap with G7 in focus as RBI weighs inflation risks : Report
A YES Bank report argues that keeping a certain gap between India's and G7 interest rates matters for attracting foreign debt capital, especially as the US Federal Reserve is expected to keep hiking rates. The RBI's inflation projection for Q3 FY27 reached 6%, the upper limit of its 2–6% tolerance band, and September data showed broader price increases, rising household inflation expectations and businesses passing higher input costs on to consumers. India's GDP grew 7.8% in Q1 FY27, while demand pressures remained subdued and the output gap appeared to be narrowing. YES Bank forecasts a cumulative 50-basis-point repo rate hike, with 25 basis points in December and 25 in February, but notes this is its own forecast rather than an RBI decision. The report also flags risks from higher energy prices, supply-chain pressures and El Niño.
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