RBI MPC: Gov Malhotra revises inflation forecast to 5.2% from 5% for FY27

RBI MPC announcements: Reserve Bank of India (RBI) Governor Sanjay Malhotra, during the Monetary Policy Committee announcements, revised the inflation forecast to 5.2 per cent from the earlier 5.0 per cent for FY27. He said that higher crude oil prices, food costs and a weaker rupee have complicated the outlook for price stability.

He projected inflation for Q2 at 4.9 per cent, Q3 at 6 per cent, Q4 at 5.7 per cent and 5.6 per cent for Q1 of FY28. Risks are evenly balanced, he said.

The RBI Governor said that the inflation outlook remains one of the most closely watched parts of the policy review.

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He said broadening of price pressures was visible in the diffusion indices of the RBI. The near term inflation outlook pointed to continued supply-side pressure due to a mix of factors, including monsoon deficit, El Nino conditions, and rising oil prices.

"The sudden re-escalation of the West Asia conflict in September and the consequent hardening, as well as volatility in global crude prices, soured global economic sentiments and heightened financial market volatility. Although global growth remains resilient, it is projected to decelerate this year with respect to the previous year. Driven by escalating energy costs and rising food prices, global inflation is projected to increase sharply, prompting monetary policy tightening by major central banks across the world,” he said at the beginning of the announcements.

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He said global financial market sentiments are being kept nervous and fragile due to lingering trade uncertainty, rising bond yields in advanced economies, and an appreciating dollar. “Further tightening of global financial conditions, uncertainty about fair valuation of AI stocks, and an elusive resolution of the West Asia conflict pose significant downside risks,” he said.