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RBI MPC lifts FY27 growth forecast but keeps repo rate at 5.25%

The Reserve Bank of India raised its FY27 GDP outlook to 6.7% and lowered its FY27 CPI inflation forecast to 5.0% while holding the benchmark repo rate unchanged.

Reported · Written up by our desk · Central Banks

The Reserve Bank of India, under Governor Sanjay Malhotra, raised its FY27 GDP growth forecast to 6.7% in the August policy meeting outcome on 5 August, citing confidence in the domestic growth outlook even as a Middle East crisis continues to weigh on the environment.

The RBI also lifted its quarterly projections, raising Q1 FY27 growth to 7.0% from 6.6% and Q2 to 6.4% from 6.3%, while leaving Q3 at 6.5% and Q4 at 6.8% unchanged, signaling it expects growth momentum to stay resilient through the rest of the financial year.

Despite the upward growth revision, the central bank kept its monetary stance unchanged, leaving the policy repo rate at 5.25% and retaining a neutral stance. The Standing Deposit Facility rate was kept at 5.0%, while the Marginal Standing Facility rate and the bank rate remained at 5.5%.

RBI said the outlook remains uncertain due to factors including the Southwest monsoon, El Niño conditions, geopolitical tensions, and global trade policy developments. It trimmed its FY27 CPI inflation forecast to 5.0% from 5.1%, with quarterly updates that included a lower Q1 estimate at 4.1% and a reduced Q2 forecast at 4.7%.

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