The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday raised its inflation forecast for FY27, marking a shift from the central bank’s earlier expectation of disinflation. CPI inflation projections for Q1 and Q2 of FY27 have been revised slightly upward to 4 per cent and 4.2 per cent, respectively.
For FY26, the MPC has also slightly adjusted its projections, now forecasting overall inflation at 2.1 per cent, with Q4 at 3.2 per cent. By comparison, the December MPC round had estimated inflation at 2.9 per cent for Q4, 3.9 per cent for Q1, and 4.0 per cent for Q2 of FY27.
In its December meeting, the MPC had lowered the FY26 inflation target to 2 per cent from October’s 2.6 per cent estimate, reflecting a more disinflationary outlook at the time. However, recent data and emerging trends prompted the committee to revise its projections upward this week.
The announcement follows the MPC’s three-day review, which concluded on Friday with the policy repo rate kept unchanged at 5.25 per cent and the stance maintained as neutral.>
