RBI MPC Meet: CPI inflation projection for FY26 revised down to 3.7%

Business Upturn

4 days ago

By Aditya Bhagchandani Published on June 6, 2025, 10:18 IST
The Reserve Bank of India's Monetary Policy Committee (MPC) has revised its consumer price index (CPI) inflation forecast for FY26 downward to 3.7%, from an earlier projection of 4%. RBI Governor Sanjay Malhotra stated that the MPC will now carefully assess data and the evolving macroeconomic outlook before taking further action.
The quarterly projections for FY26 inflation are as follows: Q1: 2.9%
Q2: 3.4%
Q3: 3.9%
Q4: 4.4%
This downward revision comes in the wake of easing inflationary pressures and a changing global economic environment.
Earlier in the meeting, the RBI delivered a surprise 50 basis point cut in the repo rate, bringing it down from 6.00% to 5.50%. Alongside the rate cut, the central bank adjusted the policy stance from 'accommodative' to 'neutral.' The SDF rate was reduced to 5.25% from 5.75%, while the MSF rate was brought down to 5.75% from 6.25%.
Bond markets responded positively, with the 10-year government bond yield dropping 9 basis points to 6.1611%, compared to the previous close of 6.2465%. The rupee remained steady in early trade, with the 1-month non-deliverable forward indicating a range of 85.86–85.90.
The shift in stance and downward revision in inflation projections indicate the RBI's intention to maintain flexibility in future decisions, while monitoring the impact of global volatility and domestic growth indicators.
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