Bank of America Cuts India's Growth Forecast, Flags Rising Inflation Risks Amid Ongoing Conflict

Bank of America has reduced its India growth forecast to 6.5% for FY27 from 7% and raised its inflation projection to 5.2% from 4.7%. The bank warned of further downside risk due to the ongoing Middle East conflict and its impact on energy prices. Early high-frequency data shows emerging stress in manufacturing, international air traffic, and vehicle sales. BofA expects the Reserve Bank of India to shift to a more hawkish stance, with a 50 basis points rate hike in FY27.