As price pressures spread, India's central bank is highly likely to keep raising interest rates over its next several meetings, joining the global cycle of monetary tightening.

An increasing number of economists at institutions including Goldman Sachs, Standard Chartered, Deutsche Bank and Morgan Stanley expect the Reserve Bank of India to raise rates by another 25 basis points at its next policy meeting on December 4.

Some institutions expect an additional 50 basis points of hikes in the first half of 2027, which would lift the policy rate from the current 5.5% to 6.25%, a two-year high. At that point, India's benchmark rate would rank among the highest in Asia.

Less than a year ago, the market widely expected the Indian central bank to cut rates, but the inflation outlook has deteriorated faster than anticipated.

Reports say the central bank delivered its first rate hike in nearly four years on Wednesday and shifted its policy stance to "cautious and gradual tightening," sending an early signal that inflation has spread broadly, which in turn fueled market expectations for continued rate increases.

Goldman Sachs analyst Santanu Sengupta said the bank's gauge of India's central bank policy tone shows that policymakers' language has become significantly more hawkish than in August. He expects at least another 75 basis points of tightening ahead, citing relatively resilient economic growth, broadly spreading price pressures, and the possibility that El Nino could push food inflation even higher in 2027.

Citi's Samiran Chakraborty now also believes the probability of a cumulative 75 basis points of rate hikes has risen.