India May Raise Rates Soon as Inflation Pressures Build

An analyst at Capital Economics said India’s central bank may soon begin raising its policy rate as inflation pressures continue to build. According to Jin10, Capital Economics analyst Shilan Shah wrote in a report that India’s headline CPI inflation rose to 3.9% in May, still below the central bank’s 4% target but the highest reading since February 2025. Shah said the acceleration was mainly driven by a surge in fuel inflation, noting that gasoline prices were raised four times in a row last month and that more increases could occur in the coming weeks. The report added that broader supply-chain disruptions were expected to start pushing up core inflation. Capital Economics forecast that the Reserve Bank of India would raise rates by 75 basis points in 2026, taking the policy rate to 6.00%.