The Reserve Bank of India (RBI) has revised its real GDP growth projection for FY26 upward to 6.8% from 6.5%, citing robust domestic demand and the positive impact of recent policy measures. The upgrade highlights the economy’s resilience despite global headwinds, with domestic drivers continuing to provide strong support.
In a major relief for households and businesses, the RBI has also sharply lowered its average Consumer Price Index (CPI) inflation forecast for FY26 to 2.6% from 3.1%. The central bank attributed this to moderating headline inflation and the expected pass-through from the recent Goods and Services Tax (GST) rate rationalisation, which is likely to ease prices further and stimulate consumption.
According to the RBI’s latest projections, inflation is expected at 1.8% in Q2 FY26, 1.8% in Q3, 4.0% in Q4, and 4.5% in Q1 FY27. This path suggests inflation will remain well within the 2–6% target band in the near term but could gradually firm up towards the latter part of the fiscal year as the economy adjusts to evolving conditions.
The Monetary Policy Committee (MPC) voted unanimously to keep the repo rate unchanged at 5.5% and retained a neutral policy stance, reiterating its focus on supporting growth while ensuring inflation remains anchored within the mandated range.