India’s central bank held its benchmark rate at 5.25% for a fifth consecutive meeting despite retail inflation exceeding its 4% medium-term target. Consumer inflation hit an 18-month high of 4.38% in June driven by surging oil prices. Core inflation, which excludes energy and food prices, stands at 3.7% but HSBC Global Investment Research forecasts it will reach 4.7% by March 2027 and expects two 25 basis-point rate hikes in October and December. The Indian economy faces significant macroeconomic headwinds, with the country relying on imports for nearly 85% of its fuel needs while both current and fiscal deficits are widening.
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