Deutsche Bank expects a rate hike in December and two in 2019

Deutsche Bank is expecting one more rate hike this year followed by two more hikes in April and June.

"The Reserve Bank of India (RBI) made it clear that it is not going to use interest rate defense just for forex management," said Kaushik Das, chief economist at Deutsche Bank.

Das also said more depreciation in the currency is likely in the next three to six months.

“Given what is happening globally ... we think there could be still more depreciation pressure on the currency,” he said.

He further added, "We expect policy rates to go up by 7.25 percent by mid-2019."

Das added that bond yields will stay above 8 percent for some time.