Indian Rupee: RBI seen starting mini hiking cycle - Societe Generale

FXStreet Insights Team FXStreet

Societe Generale’s Kunal Kundu expects the Reserve Bank of India (RBI) to respond to India’s broadening inflation pressures with a new mini rate-hike cycle. Kundu projects a 25bp hike in October, followed by two similar moves in December and February. While not its base case, Kundu also flags a non-negligible risk that the RBI could opt for a larger 50bp increase.

Rate hikes projected into early 2027

"The pickup in services inflation is particularly important from a monetary policy perspective."

"With headline inflation above the median target for a third consecutive month and underlying inflation beginning to firm, the room to look through food-led price pressures is narrowing."

"We continue to believe that the RBI will initiate a mini rate-hike cycle, announcing a 25bp hike at its October meeting, followed by two similar increases at its December and February meetings."

"Although this is not our baseline scenario, we also do not rule out a 50bp hike."

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

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold struggles below $4,300, near one-month low as USD sticks to gains ahead of Fed

Gold struggles to capitalize on its modest Asian session uptick, and remains close to a one-month low, which it touched the previous day. The commodity currently trades just below the $4,300 mark as traders move to the sidelines ahead of the crucial two-day FOMC policy meeting, starting later today.

Dogecoin clings to EMA support as recovery lacks conviction

Dogecoin (DOGE) hovers around $0.083 at the time of writing on Tuesday after finding support around the key support zone the previous day. Quiet institutional demand, along with mixed derivatives positioning, suggests fading interest in the dog-themed meme coin.

AI, markets and a more complicated world

The week started with upward pressure on energy prices, US 10-year yield breaching the 5% mark and very uncomfortable questions regarding AI, and this time, it was not about the circular deals, financing capabilities, investor greed, earnings, the impact of AI on different sectors and businesses, the parabolic rise in market prices, PE ratios and so on.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.