loader2
Login Open ICICI 3-in-1 Account
  • Text Size
  • Text to Speech
  • Color Contrast
  • Pause Animations

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

Rising global interest rates environment puts pressure on RBI to follow suit

ICICIdirect Research 25 Sep 2026 DISCLAIMER

Global debt market has been under a storm since last few months due to rising bond yields, rate hike by global central bankers, rising crude oil prices and rising inflation concerns. The US, Japan, Australia, and Euro Area, along with Emerging market countries like South Korea, Indonesia, Philippines have hiked benchmark rates by 25bps-100bps range.
In last one week, US 10 -year bond yield has risen almost 25bps from 4.95% to 5.20%, UK 10-year yield has risen 16bps from 5.22% to 5.38%, Japan 10-year yield has risen 10bps from 3.0% to 3.1% mark. However, during the same period, India 10-year bond yield has risen by only 10bps 7.04% to 7.14%.
Indian bond market has seen a consistent outperformance backed by relatively better fundamentals in terms of lower inflation and controlled fiscal deficit.
In the near term, RBI may also have to resort to a rate hike to manage relative yield spreads and inflation expectations. In current set up, with oil at US$ 105/bbl and with limited visibility of it slipping to USD 85/bbl (RBI assumption in its inflation forecast) clouds the outlook. At the same time, the US Fed’s firmer policy stance (70% probability) with one more rate hike in 2026 leaves the RBI MPC with limited degree of freedom to stay put on rates come October 2026. Had it only been India’s domestic macros, RBI may have adopted a policy pause. Market is expecting 50-75bps rate hike by RBI over the next 6 months.

Download
ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Download
ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere