RBI raises FY27 growth forecast to 7.1% from 6.7%
What's the story
The Reserve Bank of India (RBI) has revised its real GDP growth projection for the fiscal year 2026-27 (FY27) from 6.7% to a higher 7.1%. The announcement was made by RBI Governor Sanjay Malhotra on Wednesday. The central bank also raised its growth estimates for the second and third quarters of FY27, while keeping the fourth quarter estimate unchanged at 6.8%.
Revised projections
Growth estimates for Q2 and Q3 also raised
The RBI has revised its growth estimates for the second and third quarters of FY27.
The Q2FY27 estimate has been raised to 7.2% from an earlier 6.4%, while the Q3FY27 projection is now at 6.9%, up from a previous estimate of 6.5%.
However, for Q1FY28, the central bank has lowered its growth estimate slightly to 7.1% from an earlier forecast of 7.3%.
Policy adjustments
Repo rate hiked to 5.5%
Along with the growth forecast revision, the Monetary Policy Committee (MPC) of the RBI has also hiked the repo rate by 25 basis points to 5.5% from an earlier 5.25%.
The committee has also changed its policy stance from neutral to calibrated tightening.
Malhotra said that the inflation outlook is less favorable than last year and a recalibration of the policy rate was necessary.
Inflation forecast
Rate cuts not on the table in near term
The RBI has projected core inflation at 4.4% for FY27 and consumer price inflation at an average of 5.8% over the remaining three quarters of the fiscal year.
Malhotra said that rate cuts are not on the table in the near term.
Future policy action will either be a rate hike or a pause, depending on evolving conditions, with the duration and extent of tightening contingent on inflation outlook.