India’s central bank is likely to start raising interest rates as early as ​June on increasing inflation risks from higher crude prices, economists at ‌Standard Chartered said in a note on Thursday.

Rising ​global yields and rate hikes from ⁠other Asian central banks could also lead to higher policy rates, StanChart’s India economists Anubhuti Sahay and Saurav Anand said in a ‌note.

“We expect 50 bps of hikes, split equally between June and August. However, if there ‌is no hike in June, the repo rate could ‌be ⁠hiked by 50 bps in August.”

The Reserve ⁠Bank of India’s rate-setting panel is set to announce its rate decision on June 5, in its second meeting since the Iran war ​began. Last month, the ‌RBI had said it would watch the duration and extent of the conflict-led disruptions.

India’s overnight index swaps are pricing in 125 bps of rate hikes over the ‌next 12 months.

India could hike rates by another ​25 to 50 basis points through March-end, if inflation turns out to be higher than expected ⁠due to continued pressure from commodity prices and a weak rupee, the economists said.

StanChart’s previous forecast was for India’s ‌policy rate to remain unchanged at 5.25% in this financial year.

The economists say rate hikes would help anchor sentiment and contain second-order effects on the rupee and inflation.

The Indian rupee is among the worst performing Asian currencies this year and had dropped around 6% through Wednesday ‌since the start of the Iran war, coming very close ​to 97-per-dollar level.

India is the world’s third-largest importer and consumer of crude oil. The country has started ⁠raising fuel prices and the government has called for austerity ⁠measures to save foreign exchange.

Domestic retail inflation, which stood at 3.48% in April, is forecast at 4.9% ‌this fiscal year, up 20 bps from the previous estimate, StanChart economists said.

The central bank targets inflation at ​4%, within a tolerance band of 2%-6%.

Published on May 21, 2026