During his address, RBI Governor Sanjay Malhotra said the Indian economy is in a good spot, with strong growth and inflation remaining below the tolerance band, even as global uncertainties persist.
The Governor said headline inflation during November-December remained below the tolerance band, while the growth outlook continues to remain favourable.
He added that with the signing of landmark trade deals with the EU and the US, growth momentum is likely to be sustained for a longer period.
| Period | Current CPI Forecast | Earlier CPI Forecast |
| FY26 | 2.1% | 2% |
| Q3 FY26 | – | 0.6% |
| Q4 FY26 | 3.2% | 2.9% |
| Q1 FY27 | 4% | 3.9% |
| Q2 FY27 | 4.2% | 4% |
The RBI projected headline CPI inflation at 2.1% for FY26, while flagging an upward bias toward the end of the year.
Inflation is now seen rising to 3.2% in the fourth quarter of FY26, reflecting firmer price pressures.
The central bank expects inflation to normalise gradually, with CPI projected at 4% in Q1 FY27 and 4.2% in Q2 FY27, moving closer to its medium-term target.
The MPC unanimously voted to keep the policy repo rate unchanged at 5.25%, in line with market expectations. The Standing Deposit Facility (SDF) rate was retained at 5%, while the Bank Rate remained unchanged at 5.5%.
Ahead of the policy, economists polled by CNBC-TV18 had expected FY26 inflation to average between 2% and 2.5%, supported by easing food inflation and favourable base effects. For FY27, inflation is expected to normalise higher, in the 3.8%–5% range, reflecting a return to trend demand conditions.
The MPC said the growth outlook remains favourable, though it noted that external headwinds have intensified since the last policy meeting, amid a confluence of escalating geopolitical events that are reshaping the global economic order.
The central bank also said it will release a new series for GDP and inflation in the coming days. It revised its inflation outlook to 4% for Q1 FY27 and 4.2% for Q2 FY27, flagging a slight upward revision due to an increase in prices of precious metals.
The MPC decided to continue with a neutral stance, signalling that future policy actions will remain guided by incoming inflation and growth data, while ensuring adequate liquidity to support the economy.
