Nomura expects the Reserve Bank of India to deliver another 25-basis-point rate hike in December, taking the repo rate to 5.75%, before pausing in 2027. It contrasts this with the market's view of a "long-haul hiking cycle".
"The February 2027 meeting remains live, but it is not a done deal," Nomura said.
The brokerage described the RBI's October policy as a "hawkish tilt" but said the post-policy press conference was "more balanced". The Monetary Policy Committee unanimously raised the repo rate by 25 basis points to 5.50% and changed its stance to "calibrated tightening" from "neutral".
Nomura said the stance change was a "deliberate policy move" aimed at anchoring inflation expectations and building a buffer against adverse global conditions. However, it noted that "today's rate hike and the data dependent forward guidance could have been easily delivered under a 'neutral' stance".
The brokerage said the RBI had "tried hard to dilute its messaging and signal data dependence", with the MPC clarifying that "calibrated tightening" only signals that "given the current conditions, rate cuts are off the table in the near term". The "duration and extent of rate hike cycle", it added, would depend on "actual growth-inflation developments and outlook".