RBI may increase interest rates! Home, car and personal loans may become expensive at the end of the year

The Reserve Bank of India (RBI) cannot make any changes in the repo rate for some time to come. However, global brokerage firm BofA Securities believes that from December 2026, RBI may increase interest rates by a total of 50 basis points (0.50%), as inflationary pressure is now expected to increase due to domestic reasons.

According to the report, while earlier the biggest threat to the economy was global geopolitical tension, now domestic factors like weather and monsoon have become more important. They may play a big role in deciding the monetary policy of RBI in the coming times.

GDP growth estimate increased in FY27

BofA Securities has increased India’s GDP growth forecast for financial year 2026-27 (FY27) from 6.5% to 6.9%. According to the report, economic growth is expected to be strengthened due to increase in consumption and investment in the country.

Inflation currently under control, but pressure may increase further

The report estimates Consumer Price Index (CPI) based inflation for FY27 at 4.8%, which is lower than the earlier estimate. However, the report warns that if the monsoon remains weaker than normal and the impact of El Niño increases, then food inflation may increase in the second half of the financial year. This may also affect the rural economy.

You can get relief due to these reasons

According to the report, adequate stocks of food grains in the country, softening of global commodity prices and better trade conditions can help in reducing inflationary pressure to some extent.

At the same time, due to low crude oil prices in FY27, India’s current account deficit is expected to be limited to 1.2% of GDP. Also, fiscal deficit is estimated to be 4.5%.

NBFC will benefit, but loans may become expensive

The report says that non-banking financial companies (NBFCs) will benefit from the strong economic environment. Especially the demand for retail loans, vehicle loans and MSME loans may increase.

However, if RBI increases interest rates at the end of the year, the cost of raising funds for banks and NBFCs may increase. This can also affect loan interest rates, due to which home loans, car loans and personal loans may become expensive in the future.