RBI MPC Meeting 2026: Central bank revises inflation downwards to 5% for FY27

RBI MPC Meeting 2026: The Reserve Bank of India (RBI) revised its inflation forecast downwards to 5% for FY27 from 5.1% previously projected, with Q2 at 4.7%, Q3 at 5.9%, and Q4 at 5.5%. Inflation for Q1FY28 is projected at 5.3%, with risks being evenly balanced.

RBI Governor Sanjay Malhotra said core inflation is projected at 4.3% for the current financial year (2026-27). Further, he noted that core inflation, excluding precious metals, is expected to remain below headline core inflation in the near term, though it is likely to converge with core inflation by the end of the financial year.

Here are the quarterly estimates:

Q2FY27: Raised to 4.7% from 4.2%

Q3FY27: Raised to 5.9% from 5.1%

Q4FY27: Lowered to 5.5% from 5.9%

Q1FY28: Estimated at 5.3%

RBI Governor Sanjay Malhotra said headline retail inflation has moved above the central bank's target broadly in line with expectations, driven largely by food and fuel prices, while underlying price pressures remain contained. He noted that inflation in the first quarter was marginally lower than the RBI's projections due to the limited pass-through of input cost pressures. Core inflation, excluding precious metals, remains benign and is expected to align with broader core inflation by the end of the financial year, following a peak in the third quarter.

On growth, Malhotra said the Indian economy continues to be supported by resilient domestic demand, steady expansion in manufacturing and services, and robust exports. However, growth is expected to moderate in FY27 amid uncertainties surrounding the southwest monsoon, El Niño conditions, geopolitical tensions, and global trade policies. He said the Monetary Policy Committee needs greater clarity on the inflation trajectory before considering any policy action, adding that future decisions will depend on the evolving balance between growth and inflation.

RBI keeps policy rate unchanged

The Reserve Bank of India on August 5 kept the repo rate unchanged at 5.25%, in line with market expectations, following the conclusion of the Monetary Policy Committee (MPC) meeting.

The six-member MPC, comprising three RBI officials and three external members, unanimously voted to leave the benchmark policy rate unchanged. The committee also retained its "neutral" policy stance.

This marks the fifth consecutive policy review in which the RBI has maintained the status quo on interest rates, following a 25-basis-point reduction in the repo rate from 5.5% to 5.25% in October 2025. The central bank has since kept rates unchanged in its December 2025, February 2026, April 2026, June 2026, and August 2026 policy meetings.

The next RBI Monetary Policy Committee meeting is scheduled for October 5 to October 7, 2026.

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