Indian Rupee: RBI seen delaying rate hikes – MUFG

FXStreet Insights Team FXStreet

Michael Wan at MUFG reports that India’s July Consumer Price Index (CPI) rose to 4.45% year-on-year, slightly below consensus but above June’s 4.38%, driven mainly by higher food prices. With inflation still within the RBI’s 2–6% band, Wan expects the central bank to keep a neutral stance for now and delay a projected 50 basis points hiking cycle to start in December 2026.

Inflation supports later tightening path

"Meanwhile in India, July CPI printed at 4.45%yoy, marginally below consensus estimates of 4.5%yoy but accelerating from 4.38%yoy in June."

"Food prices drove the uptick, with consumer food inflation rising to 5.52%yoy from June’s 5.32%yoy, highlighting vulnerability to weather and external shocks."

"Although headline inflation remained above the maintenance level of 4.0%yoy for a second consecutive month, it is still comfortably within RBI’s target inflation band of 2-6%."

"We believe that the RBI will continue to maintain its neutral stance for now, but we see some signs that inflation is likely to broaden out more moving forward given firm domestic demand, accelerating credit growth and overall supportive fiscal position."

"We continue to see RBI hiking rates by 50bps this cycle but we have recently pushed out the timing of hikes to start from December 2026 instead."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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