RBI Keeps Repo Rates Unchanged, Raises FY27 Growth Forecast to 6.7%

The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.25 per cent, with all members of the Monetary Policy Committee (MPC) unanimously backing the decision, signalling confidence in the economy while remaining cautious about evolving global and domestic risks.

Announcing the bi-monthly monetary policy, RBI Governor Sanjay Malhotra said the central bank has raised India's FY2026-27 GDP growth forecast to 6.7 per cent from the earlier estimate of 6.6 per cent, reflecting continued resilience in economic activity despite persistent international headwinds.

The RBI also lowered its inflation projection to 5 per cent from 5.1 per cent. However, the Governor cautioned that the inflation outlook remains uncertain due to factors such as monsoon performance, the possibility of El Nino conditions, and geopolitical developments, all of which could influence food and commodity prices.

Highlighting the economy's underlying strength, the Governor said India continues to demonstrate resilience even as global uncertainties persist. He noted that system liquidity averaged a surplus of around Rs 1 lakh crore daily since June, ensuring adequate financial conditions to support economic activity.

External sector indicators also remained encouraging. During April-May, the current account recorded a surplus of USD 2.8 billion, while gross foreign direct investment (FDI) inflows reached USD 30.7 billion in the first quarter, with net inflows also showing improvement.

The RBI further pointed to a turnaround in foreign portfolio investment (FPI), with net inflows of USD 7.1 billion during June and July, indicating renewed investor confidence in Indian markets.

The central bank said foreign exchange reserves remain adequate to cushion the economy against external shocks and maintain financial stability.

With inflation showing signs of moderation and growth prospects improving, the RBI chose policy continuity while remaining watchful of emerging risks. The next MPC meeting is scheduled from October 5 to 7, when policymakers will reassess domestic and global economic conditions before taking their next interest rate decision.