RBI MPC meeting 2026: Central bank sets FY27 inflation forecast at 4.6% amidst conflict in West Asia

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday has projected India's Consumer Price Index (CPI) inflation outlook for FY2026–27 at 4.6 per cent.

The decision was announced at the conclusion of the Sanjay Malhotra-led MPC meeting, alongside the central bank’s latest monetary policy statement.

Governor Malhotra stated that in January and February, headline inflation remained below target at 2.7% and 3.2%, respectively. The food group, which was in deflation for the previous four months, recorded inflation. Fuel inflation was modest, and core inflation stood at 3.7%, indicating benign underlying price pressures, especially when excluding precious metals.

This decision was made during a three-day meeting. The committee held the repo rate steady at 5.25 per cent and retained a neutral policy stance, signalling flexibility as it navigates global volatility and domestic growth conditions. RBI also projected real GDP for FY27 at 6.9%.

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Revised CPI inflation projections

Based on the updated assessment, the MPC set out the following inflation path:

• Q1 FY27: 4% 

• Q2 FY27: 4.4% 

• Q3 FY27: 5.2%

• Q4 FY27: 4.7%

"Core inflation is projected at 4.4%, and excluding precious metals, core inflation is even lower, indicating contained underlying inflationary pressures. However, risks to these projections are on the upside. The external sector and global trade are expected to witness further development," said Governor Malhotra.

Inflation and ongoing tensions in West Asia

RBI governor further stated that recent spikes in energy prices due to conflicts pose a risk, although retail prices of petrol and diesel have remained unchanged so far. Higher global energy prices have led to some price increases in other fuel items.

The food price outlook is comfortable in the near term, supported by robust rabi production, adequate reservoir levels, and comfortable buffer stocks. However, the likely emergence of El Niño conditions could pose a risk.