India Holds Rates, Revises Up FY26/27 GDP Forecasts

2026-08-05 04:34 By Chusnul Chotimah 1 min. read

The Reserve Bank of India (RBI) left its key repo rate unchanged at 5.25% for the fourth consecutive meeting in September and maintained a neutral stance amid a weakening rupee.

The decision was in line with expectations, as the Middle East conflict and global uncertainty threatened GDP growth and fueled inflationary pressures.

The annual inflation rate surged to 4.38% in June 2026, marking the highest level since December 2024 and rising above the RBI's 4% target for the first time in 17 months, though it remained within the central bank's 2%–6% tolerance band.

On the economic outlook, the RBI raised its GDP growth forecast for FY2026/27 to 6.7% from its previous estimate of 6.6%.

Meanwhile, inflation is projected to average 5.0%, down from the previous estimate of 5.1%.

Inflation is forecast at 4.7% in Q2, 5.9% in Q3, and 5.5% in Q4.

Meanwhile, core inflation is projected to average 4.3%, down from 4.7%.

The central bank also held the SDF rate at 5.0% and the MSF rate at 5.50%.



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India Holds Rates, Revises Up FY26/27 GDP Forecasts
The Reserve Bank of India (RBI) left its key repo rate unchanged at 5.25% for the fourth consecutive meeting in September and maintained a neutral stance amid a weakening rupee. The decision was in line with expectations, as the Middle East conflict and global uncertainty threatened GDP growth and fueled inflationary pressures. The annual inflation rate surged to 4.38% in June 2026, marking the highest level since December 2024 and rising above the RBI's 4% target for the first time in 17 months, though it remained within the central bank's 2%–6% tolerance band. On the economic outlook, the RBI raised its GDP growth forecast for FY2026/27 to 6.7% from its previous estimate of 6.6%. Meanwhile, inflation is projected to average 5.0%, down from the previous estimate of 5.1%. Inflation is forecast at 4.7% in Q2, 5.9% in Q3, and 5.5% in Q4. Meanwhile, core inflation is projected to average 4.3%, down from 4.7%. The central bank also held the SDF rate at 5.0% and the MSF rate at 5.50%.
2026-08-05
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The Reserve Bank of India said the economy remained resilient despite growing risks from the war in Iran and a weak monsoon, according to its July 2026 State of the Economy report. The central bank said domestic activity stayed expansive, supported by improving rural demand, firm urban consumption, and robust industrial and services sectors, while high-frequency indicators continued to point to solid momentum. Headline consumer inflation edged higher in June due to food and fuel prices, although core inflation remained unchanged, while wholesale inflation also ticked up. The report highlighted that elevated oil prices and an uneven monsoon, which has delayed the sowing of key crops, could weigh on the outlook. Even so, it kept its forecast for the economy to grow 6.6% in the FY ending March 2027 and projected average inflation at 5.1%. Governor Sanjay Malhotra said inflation pressures are "largely supply-side" and added that it is "premature to discuss monetary tightening."
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India Holds Rates, Revises Down FY26/27 GDP Forecasts
The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.25% for the third consecutive meeting in June and maintained a neutral stance amid a weakening rupee. The decision was in line with market expectations, as the conflict in the Middle East threatened GDP growth and fueled inflationary pressures. On the economic outlook, the RBI lowered its GDP growth forecast for FY2026/27 to 6.6% from its earlier estimate of 6.9%. GDP is projected to grow by 6.6% in the first quarter of the fiscal year, followed by 6.3% in the second quarter and 6.5% and 6.8% in Q3 and Q4, respectively. Meanwhile, inflation is projected to average 5.1%, up from the earlier estimate of 4.6%, mainly driven by higher LPG, base metal, plastic, and rubber prices. Inflation is forecast at 4.2% in Q1, 5.1% in Q2, and 5.9% in both Q3 and Q4. Core inflation is projected at 4.7%. The central bank also kept the SDF rate at 5.0% and the MSF rate at 5.50%.
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