Goldman Sachs sees two rate hikes for India in 2026

Goldman Sachs has projected that the Reserve Bank of India (RBI) will implement two rate hikes by 2026, citing persistent inflationary pressures and a tightening bias in monetary policy. This outlook reflects expectations of a widening interest rate differential between India and other major economies, supporting renewed foreign capital inflows into Indian debt and equity markets. The forecast strengthens the near-term positive bias for the Indian rupee and could bolster yields on Indian government securities as real returns become more attractive. Equities in the financial sector, particularly domestic banks, may benefit from steeper lending margins in a higher-rate environment. Traders will watch the upcoming CPI and core inflation prints in late 2025 as a key catalyst for confirming the timing and magnitude of future rate actions.

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