India’s GDP growth is projected to reach 6.5% in 2026 and 6.4% in 2027, positioning the country as one of the fastest-growing major economies, according to a report by DBS Bank. The report also anticipates a gradual increase in CPI inflation from 2.2% in 2025 to 3.5% in 2026 and 4.5% in 2027, indicating a trend towards price normalization.
DBS Bank’s report suggests that the Reserve Bank of India is likely to maintain a stable monetary stance by keeping the policy rate unchanged at 5.25% throughout 2026 and 2027. Additionally, it forecasts a decrease in India’s 10-year government bond yield from 6.60% in early 2026 to 6.40% by the end of 2027, despite global rate fluctuations.
The recent surge in bond yields in developed markets, reaching levels not seen in decades, is viewed by DBS Bank as a market normalization rather than a precursor to a crisis. The bank emphasizes that while the sell-off may be concerning, it does not indicate an impending crisis.
In global bond markets outside Japan, the rise in yields is seen as a reflection of normalization in market conditions. The report highlights that maintaining central bank credibility and effective fiscal-monetary coordination could help stabilize the bond market. The report also predicts that the US Federal Reserve will likely pause policy adjustments at its upcoming FOMC meeting on January 27-28 after three consecutive rate cuts.
