05.08.202604:34:48UTC+00India Holds Rates, Revises Up FY26/27 GDP Forecasts

The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.25% for the fourth consecutive meeting in September and retained a neutral policy stance amid continued pressure on the rupee. The move was widely anticipated by markets, as the conflict in the Middle East and broader global uncertainty threatened GDP growth and added to inflationary risks.

India’s annual inflation rate climbed to 4.38% in June 2026, its highest level since December 2024 and above the RBI’s 4% target for the first time in 17 months, though it remained within the central bank’s 2%–6% tolerance band.

On the outlook, the RBI raised its GDP growth forecast for FY2026/27 to 6.7%, up from 6.6%. At the same time, it trimmed its inflation forecast, projecting an average rate of 5.0%, versus the earlier estimate of 5.1%. Inflation is now expected to come in at 4.7% in Q2, 5.9% in Q3, and 5.5% in Q4, while core inflation is forecast to average 4.3%.

The central bank also left the Standing Deposit Facility (SDF) rate unchanged at 5.0% and the Marginal Standing Facility (MSF) rate at 5.50%.