Amid rising inflation due to rise in crude oil prices, there is a shocking news for the common man. India’s central bank RBI may hike loan EMI rates in October and December, a report by a leading Japanese brokerage firm has said. An overall increase of 0.50 percent can be seen in these two months. This means that taking home loans, personal loans and car loans could become very expensive in the coming days. However, RBI has not changed the policy rate for a long time. Earlier, RBI had cut the policy rate by around 1.25 percent. Let us also tell you what kind of figures the Japanese giant has presented…

Repo rate may increase by 0.50%

According to Japanese brokerage firm Nomura, the Reserve Bank of India (RBI) is likely to hike interest rates by 25 basis points in the October and December policy review meetings, taking the terminal rate to 5.75 percent. The terminal rate refers to the maximum or minimum target rate that is expected during a tightening (tight monetary policy) or easing (soft monetary policy) cycle, respectively. Interest rates are likely to increase from February 2027, which is expected to dampen consumer spending and moderate inflation in the coming year. The RBI will hike the terminal rate by 25 basis points to 5.75 per cent each in October and December, though there is a risk that the hike could be a one-off.

Inflation may come down next year

Global financial services group Nomura said in a report on Tuesday that we think rate hikes are less likely from February 2027, given the likely fall in consumption and inflation expected to remain low next year. In terms of inflation, Nomura expects inflation to pick up over the next six months due to higher food and energy prices, but it also said that as demand eases, inflation will return to target. We expect CPI inflation to pick up from 4.8 per cent (year-on-year) in August to 6.3 per cent in Q4 and around 5.3 per cent in H1 2027, before falling below 4 per cent in H2 2027, she said. “On average, we estimate CPI inflation to be 5.2 percent in FY2 (year-2027). That said, core CPI inflation is expected to be 4.3 percent in FY27 and 4 percent in FY28.

Food prices are increasing this year

Nomura said food inflation was the “biggest risk to inflation expectations in the near term”. According to the report, food prices are rising due to low rainfall and poor sowing of kharif (summer) crops this year. He said government policy measures on sugar (stock limit) and onion (selling at lower prices) could moderate the price hike, though low production of the crop suggests that there is a risk of food price hikes at present.

How will the growth happen?

On growth, Nomura said India’s real GDP growth surprised everyone at 7.8 percent (yoy) in Q2, while credit growth was “in double digits (19.1 percent yoy in August)”. However, he says, “we see some new risks to the economic outlook.” The report said lower rainfall means lower kharif (summer) and rabi (winter) crop production, which will also affect rural consumption, Nomura said. He further said that rising prices of food items can reduce the real disposable income of people and reduce the demand for non-essential items.

The impact of AI on the service sector

The brokerage firm also pointed to the impact of AI development on India’s services sector. India’s software-services surplus was $51.4 billion in Q2 2026, up from $53 billion in Q4 2025. The surplus declined quarter-on-quarter by 2.9 percent in Q1 and 0.1 percent in Q2. Nomura said raising funds for India’s growing current account may be difficult given the weak position of portfolio flows, low FCNR(B) flows and high energy prices.