With benign CPI inflation prospects and a robust growth outlook, the Monetary Policy Committee (MPC) has opted to continue with the present repo rate of 5.25% while also continuing with a neutral stance.
The growth for 1Qtr and 2Qtr of 2026-27 has been revised upwards to 6.9% and 7% and CPI inflation for these quarters is projected at 4% and 4.2% respectively. This is an optimal combination for the Indian economy at the present juncture as the growth rate in Half of 2026-27 is expected to be close to the potential growth of 7% as estimated by the Economic Survey of 2025-26.
The CPI inflation is projected to average 4.1% for this period, just marginally above the MPC’s inflation target of 4%.
The RBI recognizes downside risks to growth emanating from the continuing geopolitical tensions and volatility in global financial markets as also in international commodity prices. If any of these risks lead to an adverse impact on growth, the RBI may consider revising the repo rate downwards in its next monetary policy review.
Posts
