The Reserve Bank of India’s Monetary Policy Committee (RBI MPC) on Wednesday, October 1, revised its inflation forecast for the financial year 2026 (FY26) to 2.6%, RBI Governor Sanjay Malhotra announced.
The central bank cited a sharp decline in food prices and the rationalization of GST rates as key factors contributing to the more benign inflation outlook.
For the first quarter of FY27, the RBI MPC has lowered its inflation projection to 4.5%, down from the earlier forecast of 4.9%. Despite this decline, inflation remains slightly above the RBI’s target of 4%, indicating that price pressures still require monitoring.
Governor Malhotra noted that risks to inflation are evenly balanced, reflecting a stable macroeconomic environment.
In its previous monetary policy review in August 2025, the RBI had revised the FY26 inflation forecast downward to 3.1% from 3.7% projected in June. However, it had also anticipated inflation rising to 4.4% by the end of the year and 4.9% in Q1 FY27 due to seasonal trends and base effects.
The RBI MPC unanimously decided to keep the repo rate unchanged at 5.5%, maintaining a neutral stance to support growth while keeping inflation under control.