RBI MPC 2026: Gov Malhotra raises FY27 inflation projection by 50 bps to 5.1%

RBI MPC 2026: The Reserve Bank of India (RBI) projected India’s Consumer Price Index (CPI) inflation outlook for FY2026–27 at 5.1 per cent, about 50 basis points more than earlier projected, after the conclusion of the Monetary Policy Committee (MPC) meeting, led by Governor Sanjay Malhotra. 

He projected inflation for Q1 at 4.2 per cent, Q2 at 5.1 per cent, Q3 at 5.9 and Q4 at 5.4 per cent. Core inflation has been projected at 4.7 per cent this year. 

Although risks of higher inflation have amplified, the MPC felt it would be prudent to wait for greater clarity to emerge, said the governor. Food inflation edged up, while fuel inflation muted, he said, adding that core inflation remained stable. 

The inflation outlook was a key focus in the policy review due to rising global crude oil and gas prices amid ongoing geopolitical tensions in West Asia. Supply-chain disruptions and a weaker rupee have added to these worries.

Several economists had anticipated the central bank to revise its inflation projections upwards. Madan Sabnavis, Chief Economist at Bank of Baroda, expected the RBI to maintain the current repo rate and policy stance but adopt a more cautious tone. He said the RBI is likely to increase its inflation forecast to around 5 per cent while lowering the GDP growth estimate to about 6.5 per cent from 6.9 per cent.

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Hitesh Suvarna, Economist at JM Financial, also expected the RBI to raise its inflation estimate for the fiscal year 2027 by 20 basis points to 4.8 per cent. He added that the growth forecast may be trimmed to 6.8 per cent.