2 hrs ago
JPMorgan warns India’s sugar high may limit RBI rate hikes
India’s economy grew quickly, but some of that growth came from government and central-bank support.
JPMorgan economist Jahangir Aziz compared this boost to a temporary sugar high.
He said the boost may fade over time.
The Reserve Bank of India is expected to raise interest rates by 0.25 percentage points this year.
Investors are expecting about four such increases in total.
Aziz thinks that expectation may be too high.
Higher rates could make borrowing harder for businesses and families.
He said policymakers should wait and see how the first increase affects the economy.
JPMorgan’s Jahangir Aziz expects the Reserve Bank of India to deliver an initial quarter-point rate increase this year.
Aziz is uncertain whether further hikes will follow, while markets imply roughly 100 basis points of increases in 2026.
India’s latest-quarter growth approached 8% year over year after substantial policy support during the second half of 2025.
Earlier support included lower borrowing costs, goods-and-services tax cuts, regulatory easing and faster credit growth.
Aziz warned that higher rates could eventually weaken business investment and household consumption as the stimulus effect fades.
- Who
- Jahangir Aziz of JPMorgan Chase & Co. and the Reserve Bank of India.
- What
- Aziz warned that markets may be pricing in too many Indian interest-rate increases after a stimulus-supported growth surge.
- Where
- India, in comments made on Bloomberg Television.
- When
- The comments were made on Friday and published September 18, 2026; the article refers to expected rate increases in 2026.
- Why
- Earlier stimulus may fade, while additional rate hikes could weaken investment, consumption and broader economic activity.
Cautious tightening outlook
Markets pricing broader hikes
Number of rate increases
Cautious tightening outlook
Jahangir Aziz expects an initial quarter-point increase but says policymakers should assess its effects before assuming a continuing hiking cycle.
Markets pricing broader hikes
Financial markets imply approximately 100 basis points of rate increases during the year.
Economic momentum
Cautious tightening outlook
Aziz says India’s nearly 8% growth should be viewed against substantial policy support and may represent a temporary “sugar high.”
Markets pricing broader hikes
The strong quarterly expansion and rapid credit growth could support expectations that the economy can absorb more rate increases.
Key facts
- Latest quarterly growth
- Nearly 8% year over year
- Expected initial hike
- 25 basis points, or 0.25 percentage points
- Market pricing
- About 100 basis points of rate hikes this year
- Earlier support
- Lower borrowing costs, goods-and-services tax cuts and regulatory easing
- Credit growth
- Accelerated after the policy support
- Main concern
- Further tightening could weigh on investment and consumption
- Policy uncertainty
- Aziz is unsure whether the initial hike will begin a sustained rate-hiking cycle
Quotes
Jahangir Aziz
JPMorgan Chase co-head of investment bank economic research
“I think one needs to be careful and wait and see the impact of the rate hikes on both financial conditions internally as well as on real activity before saying that the RBI is going to be on the rate hiking cycle.”
thehindubusinessline.com
“The economy is on a sugar high. You know what happens when the sugar high fades.”
thehindubusinessline.com
Sources
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