RBI cuts FY27 GDP growth forecast to 6.6%, sees inflation higher at 5.1%
The Reserve Bank of India’s Monetary Policy Committee left the policy repo rate unchanged at 5.25% on Friday and decided to continue with the ‘neutral’ stance of policy.
The Reserve Bank of India (RBI) on Friday cut its GDP growth forecast for India for the current fiscal to 6.6% from 6.9%, while also raising the inflation projection to 5.1% from 4.6%, warning that elevated energy prices and global supply constraints were having “adverse spillovers” on economic activity. And while domestic demand remains resilient, “there are energy incipient signs of moderation in some sectors”, Governor Sanjay Malhotra said.
Malhotra added that there are indications that average crude oil prices in 2026-27 would be “substantially higher” than the $85 per barrel the central bank had assumed in its forecasts in April.
As per the new forecast, growth is seen at 6.6% in April-June 2026, 6.3% in July-September 2026, 6.5% in October-December 2026, and 6.8% in January-March 2027. Back in April, the central bank expected the country’s GDP to increase by 6.8%, 6.7%, 7%, and 7.2% in the four quarters of 2026-27.
RBI Monetary Policy Meeting June 2026 LIVE
Meanwhile, the quarterly average inflation forecasts, as measured by the Consumer Price Index (CPI), have been revised from 4%, 4.4%, 5.2%, and 4.7% to 4.2% in April-June 2026, 5.1% in July-September 2026, 5.9% in October-December 2026, and 5.4% in January-March 2027.
The RBI is mandated to target a CPI inflation of 4% in the medium-term in a range of 2-6%. The new forecasts show inflation reaching the upper bound of the RBI’s target range towards the end of 2026, with Malhotra saying the impact of the energy price shock is seen waning thereafter.
The core inflation forecast for the current year has also been increased to 4.7% from 4.4%. Core inflation is a measure of inflation that does not include food and fuel items, whose prices can be volatile. As such, it is seen as an indicator of underlying demand in the economy.
The revised macroeconomic forecasts of the RBI were announced by Malhotra while detailing the Monetary Policy Committee’s (MPC) interest rate decision. The MPC, at the conclusion of its three-day meeting, decided to leave the policy repo rate unchanged at 5.25% and continue with the ‘neutral’ stance of policy. Both the decisions were decided unanimously by the six-member MPC.
The RBI’s growth forecast revision for FY27 comes hours before the Ministry of Statistics and Programme Implementation (MoSPI) releases the provisional estimate of GDP for 2025-26 at 4pm later today along with the figures for the fourth quarter. Economists broadly expect growth to have slowed down from 7.8% in October-December 2025 to closer to 7%, which could result in MoSPI’s second advance estimate of 7.6% being missed marginally.
The Reserve Bank of India (RBI) on Friday cut its GDP growth forecast for India for the current fiscal to 6.6% from 6.9%, while also raising the inflation projection to 5.1% from 4.6%, warning that elevated energy prices and global supply constraints were having “adverse spillovers” on economic activity. And while domestic demand remains resilient, “there are energy incipient signs of moderation in some sectors”, Governor Sanjay Malhotra said.
Malhotra added that there are indications that average crude oil prices in 2026-27 would be “substantially higher” than the $85 per barrel the central bank had assumed in its forecasts in April.
As per the new forecast, growth is seen at 6.6% in April-June 2026, 6.3% in July-September 2026, 6.5% in October-December 2026, and 6.8% in January-March 2027. Back in April, the central bank expected the country’s GDP to increase by 6.8%, 6.7%, 7%, and 7.2% in the four quarters of 2026-27.
RBI Monetary Policy Meeting June 2026 LIVE
Meanwhile, the quarterly average inflation forecasts, as measured by the Consumer Price Index (CPI), have been revised from 4%, 4.4%, 5.2%, and 4.7% to 4.2% in April-June 2026, 5.1% in July-September 2026, 5.9% in October-December 2026, and 5.4% in January-March 2027.
The RBI is mandated to target a CPI inflation of 4% in the medium-term in a range of 2-6%. The new forecasts show inflation reaching the upper bound of the RBI’s target range towards the end of 2026, with Malhotra saying the impact of the energy price shock is seen waning thereafter.
The core inflation forecast for the current year has also been increased to 4.7% from 4.4%. Core inflation is a measure of inflation that does not include food and fuel items, whose prices can be volatile. As such, it is seen as an indicator of underlying demand in the economy.
The revised macroeconomic forecasts of the RBI were announced by Malhotra while detailing the Monetary Policy Committee’s (MPC) interest rate decision. The MPC, at the conclusion of its three-day meeting, decided to leave the policy repo rate unchanged at 5.25% and continue with the ‘neutral’ stance of policy. Both the decisions were decided unanimously by the six-member MPC.
The RBI’s growth forecast revision for FY27 comes hours before the Ministry of Statistics and Programme Implementation (MoSPI) releases the provisional estimate of GDP for 2025-26 at 4pm later today along with the figures for the fourth quarter. Economists broadly expect growth to have slowed down from 7.8% in October-December 2025 to closer to 7%, which could result in MoSPI’s second advance estimate of 7.6% being missed marginally.
