New Delhi is buzzing with optimism as a fresh report from DBS Bank paints a robust picture for India’s economic future. The nation is poised to maintain its position among the world’s fastest-growing major economies, with GDP growth projected at 6.5% in 2026 and a steady 6.4% in 2027. This forecast underscores the resilience of India’s growth story amid global uncertainties.
Retail inflation, measured by CPI, is expected to rise gradually from 2.2% in 2025 to 3.5% in 2026 and further to 4.5% in 2027. Analysts see this as a healthy normalization of price levels, signaling stability rather than alarm. The Reserve Bank of India (RBI) is likely to hold the repo rate steady at 5.25% through 2026 and 2027, reflecting a cautious yet confident monetary policy stance.
Even as global bond markets experience volatility, India’s 10-year government bond yield is anticipated to ease from 6.60% at the start of 2026 to 6.40% by the end of 2027. Recent upheavals in international bond markets, particularly in developed economies excluding Japan, are viewed not as harbingers of crisis but as markets reverting to normalcy.
DBS Bank’s insights highlight the credibility of central banks and coordination between governments and monetary authorities as key stabilizers. In the US, the Federal Reserve is expected to keep rates unchanged at its upcoming FOMC meeting on January 27-28, following three prior cuts. This decision stems from a careful assessment of previous easing impacts and inflation risks, not political posturing.
The American economy shows mild softening in job growth, yet low unemployment and rising incomes provide a solid foundation. For India, these global dynamics reinforce the case for sustained, steady expansion, positioning the country for long-term prosperity.