RBI lowers FY27 inflation forecast to 5%, ups GDP growth at 6.7%

The Indian economy has remained resilient amidst persisting global headwinds, RBI stated in its monetary policy. High frequency indicators available so far point towards steady domestic demand in Q1:2026-27. Private consumption remained robust. Investment continues to be resilient, as suggested by various indicators related to construction, capital goods and bank credit. External demand also sustained, as healthy expansion in services exports was complemented by a rebound in merchandise exports. Looking ahead, the turbulent global economic environment is likely to have some bearing on domestic economic activity. Saying this, RBI raised its FY27 real GDP growth forecast by 10 basis points to 6.7 per cent from 6.6 per cent projected in the June monetary policy review. The central bank expects GDP growth of 7 per cent in the first quarter, 6.4 per cent in the second quarter, 6.5 per cent in the third quarter and 6.8 per cent in the fourth quarter.

Meanwhile, the central bank lowered its CPI inflation forecast for FY27 by 10 basis points to 5 per cent from 5.1 per cent projected in the June monetary policy review. It expects inflation to average 5.3 per cent in Q1, 4.7 per cent in Q2, 5.9 per cent in Q3 and 5.5 per cent in Q4. Going forward, El Ni?o?s impact on temporal and spatial rainfall distribution continues to remain a risk, although proactive supply management and adequate stocks of foodgrains could provide buffers, RBI said. Global oil prices have remained volatile with sharp two-way movements triggered by geopolitical developments, blurring the near-term outlook. Although generalised inflation pressures continue to remain modest so far, the risks of higher food, fuel and other input prices translating into a broad-based increase in inflation persist.

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