RBI MPC Meeting 2026: The Reserve Bank of India (RBI) revised its inflation forecast upward to 5.1% for FY27 from 4.6% previously projected, with Q1 at 4.2%, Q2 at 5.1%, Q3 at 5.9%, and Q4 at 5.4%.
said core inflation is projected at 4.7% for the current financial year (2026-27), while cautioning that the outlook remains subject to several upside risks.
Here are the quarterly estimates:
Q1FY27: Raised to 4.2% from 4.0%
Q2FY27: Raised to 5.1% from 4.4%
Q3FY27: Raised to 5.9% from 5.2%
Q4FY27: Raised to 5.4% from 4.7%
He noted that heightened global uncertainty, potential supply-chain disruptions, commodity price shocks, uncertainty surrounding the spatial and temporal distribution of the southwest monsoon, and the possibility of El Niño conditions pose risks to the inflation trajectory.
However, Malhotra said the central bank derives comfort from adequate foodgrain stocks and satisfactory reservoir levels, which are expected to help cushion any adverse impact on food prices and support overall inflation management.
RBI Governor Sanjay Malhotra noted that headline retail inflation remained below the central bank’s target in March and April 2026, despite rising from 3.2% in February.(CPI) inflation stood at 3.4% in March and 3.5% in April.
He said food inflation rose modestly during the period, while fuel inflation remained subdued, as retail prices of petrol and diesel remained unchanged in both months. Core inflation remained stable at 3.7% during March-April, while core inflation excluding precious metals was significantly lower at around 2.1-2.2%.
Malhotra highlighted that international , as reflected in the Indian basket, averaged around $110 per barrel during April-May 2026, and current indications suggest that average oil prices for FY27 could be substantially higher than the assumptions made in the previous monetary policy review.
He added that rising energy costs and higher input prices have also led to a sharp increase in wholesale price inflation (WPI) in April, underscoring emerging inflationary pressures in the economy.
RBI keeps policy rate unchanged
RBI Governor Sanjay Malhotra announced that the (MPC) unanimously voted to keep the policy repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 5.25%.
Consequently, the Standing Deposit Facility (SDF) rate remains at 5.00%, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.50%.
The Governor also said that the MPC decided to maintain its ‘neutral’ policy stance, allowing it flexibility to respond to evolving domestic and global economic conditions.
The next meeting of the Monetary Policy Committee is scheduled for 3 August to 5 August 2026.
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