RBI has reduced inflation forecast for FY26, FY25 forecast remains unchanged
Feb 10, 2025, 21:35 IST
This scenario mandates "vigilance from the MPC to navigate the macroeconomic environment effectively, providing them with the flexibility to adjust policies as needed," he added.
Malhotra highlighted that while the rural economy shows signs of healthy growth, urban consumption has seen moderation. Despite a downward revision in GDP growth forecasts, the governor said that improving employment, the positive impact of the union budget, and moderating inflation will stimulate fixed investment.
In its recent monetary policy review, the Reserve Bank of India (RBI) has adjusted its inflation projections. The central bank has maintained its inflation forecast for the fiscal year 2024-25 (FY25) at 4.8%. Looking ahead, the RBI anticipates a moderation in inflation, projecting it to average 4.2% in the fiscal year 2025-26 (FY26).
This outlook is based on several factors, including expectations of a normal monsoon, which should help stabilize food prices, and ongoing improvements in supply chain dynamics. The RBI also notes that global economic conditions and energy price volatility will continue to influence the inflation trajectory.
In addition to its inflation forecasts, the RBI has taken steps to support economic growth. Notably, it has reduced the repo rate by 25 basis points to 6.25%, marking the first rate cut in nearly five years. This move aims to stimulate economic activity by making borrowing more affordable.
The central bank remains vigilant, balancing its efforts to foster growth with its mandate to maintain price stability. It continues to monitor domestic and global developments to ensure that monetary policy measures align with evolving economic conditions.