ercentage points in December 2026. ICRA, an Indian credit rating agency, and HDFC Bank, one of India’s largest banks, also see inflation moving above 5% from September 2026, which would make it harder for the central bank to stay patient if price rises spread beyond food.
Why should I care?
For markets: A 4.45% July CPI keeps a December 2026 hike on traders’ screens.
Markets don’t need to wait for an RBI meeting to move: they reprice as soon as the expected “path” for inflation and rates shifts. If more forecasts converge on inflation running above 5% from September 2026, the odds of a December 2026 hike can start getting built into short-term instruments like Treasury bills and overnight index swaps (contracts that reflect expectations for the policy rate). That typically lifts short-dated yields first, raising near-term funding costs that feed into bank loan pricing and the government’s borrowing costs, even if the RBI holds steady for the next meeting or two.