RBI cuts FY27 inflation forecast to 5%, signaling easing path for Indian markets

The Reserve Bank of India's downward revision of its inflation outlook to 5% for fiscal 2027 reinforces expectations for monetary policy accommodation, supporting risk assets and the rupee.

By Handelsavisen Newsroom · Automated 5 August 2026, 04:52 UTC · 1 min read

The Reserve Bank of India (RBI) has lowered its inflation forecast for fiscal year 2027 to 5%, down from the previously projected 5.1%, according to reports from Livemint.

The Monetary Policy Committee (MPC) also provided a quarterly breakdown, projecting inflation at 4.7% in Q2, rising to 5.9% in Q3, and settling at 5.5% in Q4.

The revision aligns with earlier projections from State Bank of India (SBI) Research, which had forecast average consumer price inflation around 5% for FY27, citing a stable rupee and supportive monetary conditions.

The central bank’s updated outlook suggests that price pressures are moderating more rapidly than anticipated, potentially opening the door for further policy easing in the coming quarters.

The revision aligns with earlier projections from State Bank of India (SBI) Research, which had forecast average consumer price inflation around 5% for FY27, citing a stable rupee and supportive monetary conditions.

The RBI’s official downgrade of its inflation target reinforces the narrative that the central bank is gaining confidence in its ability to anchor inflation within its tolerance band, reducing the likelihood of hawkish surprises in upcoming policy meetings.

For investors, the lower inflation forecast reduces the risk of prolonged tight monetary policy, which could support Indian equities and fixed-income markets.