RBI MPC revises FY26 inflation projection to 2.6% from 3.1% in August
The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday revised the inflation projection to 2.6% from earlier projected inflation rate of 3.1% in August.
"The overall inflation outlook has turned notably more benign in recent months, with headline inflation being revised down from 3.7% in June to 3.1% in August, and further to 2.6% most recently," the RBI governor said.
CPI Inflation projections:
PERIODNOW
EARLIER FY262.6%
3.1%Q2FY261.8%
2.1%Q3FY261.8%
3.1%Q4FY264.0%
4.4%Q1FY274.5%
4.9%
Also Read: RBI repo rate news live
The RBI MPC has also lowered its forecast for the first quarter of FY27 to 4.5% from the previous 4.9%. However, it remains above the central bank's target of 4%.
For the full year FY26, the RBI has projected headline inflation at 2.6%, significantly lower than the 3.1% forecast made in August. Quarter-wise estimates are: 1.8% in Q2, 1.8% in Q3 and Q4 at 4%. The central bank maintained that risks to the outlook are “evenly balanced.”
"Low inflation has primarily been attributed to a sharp fall in food inflation, as it remained largely contained," the RBI governor said.
In its previous meeting in August, the RBI MPC had lowered its inflation forecast for FY26 to 3.1% from 3.7% it had projected in June.
Meanwhile, RBI's Monetary Policy Committee (MPC) has unanimously kept its repo rate unchanged at 5.5% and has a 'neutral' stance.
"This wait and watch policy is a sound strategy since it gives ample time and space for the Committee to have clarity about transmission from the earlier frontloaded rate cut, and how GST rationalization shapes the inflation trajectory. This caution is warranted in the wake of changing growth-inflation dynamics and growing haze on exports," said Vinod Francis, GM and CFO, South Indian Bank."Looking at the inflation outlook, we’re seeing a benign trend. The inflation forecast has been revised down from 3.7 percent to 3.1 percent earlier this year, to now a much lower 2.6 percent (Our estimate for FY 26 at 2.6 percent). Core inflation likely to remain contained, and that’s a key positive," said Sneha Pandey, Fund Manager- Fixed Income, Quantum AMC.