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RBI cuts FY27 inflation forecast to 5% but holds repo rate at 5.25%
The RBI said it wants more clarity on the inflation path before taking any further policy action, with FY28 Q1 inflation projected at 5.3%.
The Reserve Bank of India (RBI) revised its inflation outlook downward, projecting retail inflation at 5.0% for FY27, compared with a prior estimate of 5.1%, while keeping the repo rate unchanged at 5.25%, according to LiveMint Markets.
In its assessment, the RBI forecast inflation of 4.7% in Q2 FY27, 5.9% in Q3, and 5.5% in Q4, and projected core inflation at 4.3% for 2026-27. The central bank said headline retail inflation is above target, largely driven by food and fuel, while underlying pressures remain contained.
On the growth outlook, RBI Governor Sanjay Malhotra said the economy remains supported by resilient domestic demand, steady expansion in manufacturing and services, and robust exports, but growth may moderate in FY27. The RBI cited uncertainties including the southwest monsoon, El Niño conditions, geopolitical tensions, and global trade policies.
The MPC, consisting of six members, voted unanimously to leave the benchmark policy rate at 5.25% and retained its neutral stance, marking the fifth straight policy review with no change to interest rates. Malhotra also said the committee needs greater clarity on the inflation trajectory before considering any policy action.