RBI Retains FY26 Inflation Forecast At 2.1%, Projects Rise To 4.2% By Q2 FY27 - MPC Keeps Repo Rate Unchanged At 5.25% With Neutral Stance

Mumbai: The Reserve Bank of India (RBI) has kept its inflation forecast for FY26 largely unchanged, signalling comfort with current price trends. The Monetary Policy Committee (MPC), in its February 6 policy, projected headline CPI inflation at around 2.1 percent for FY26, close to its earlier estimate of 2 percent.

RBI said inflation pressures have eased in recent months. The Governor highlighted that inflation during November and December stayed below the tolerance band, showing stable price conditions in the economy.

Inflation Expected To Rise Gradually Next Year

While FY26 inflation is expected to remain low, RBI sees prices rising gradually later. Inflation is projected at 3.2 percent in Q4 FY26, showing some increase in price pressure.

For FY27, inflation is expected to move closer to RBI’s medium-term target. CPI inflation is projected at 4 percent in Q1 FY27 and 4.2 percent in Q2 FY27. The RBI said the slight upward revision is mainly due to higher precious metal prices and improving demand conditions.

Repo Rate, SDF Rate And Bank Rate Unchanged

The MPC unanimously decided to keep the repo rate unchanged at 5.25 percent, which was in line with market expectations. The Standing Deposit Facility (SDF) rate remains at 5 percent, while the Bank Rate stays at 5.5 percent.

By keeping rates unchanged, RBI is trying to balance inflation control and economic growth. The central bank also maintained its neutral stance, meaning future rate decisions will depend on incoming inflation and growth data.

Growth Outlook Remains Strong Despite Global Risks

The RBI said India’s economy remains strong with steady growth momentum. The Governor noted that new trade agreements with the US and EU could support growth for a longer period.

However, the central bank also warned that global geopolitical tensions and external risks have increased since the last policy review. RBI said it will continue ensuring enough liquidity in the system to support economic activity.

The RBI also plans to release a new data series for GDP and inflation soon.