EconoTicker

The Reserve Bank of India further strengthened its dovish tone by lowering its FY26 consumer inflation forecast to 2%, down from the earlier 2.6% estimate, signaling growing confidence that price pressures will remain subdued.

The central bank also reaffirmed optimism about India’s economic momentum, projecting:

• 7.0% real GDP growth in Q3 FY26
• 6.5% in Q4 FY26
• 7.3% GDP growth for the full FY26, slightly higher than the previous 6.8% projection

The updated forecasts suggest the RBI sees room for further easing while maintaining stability in growth and inflation.

Market impact: Bullish for Indian equities and bonds; lower inflation and stronger growth outlook support domestic assets, mildly bearish for INR.

Sakshi Gupta, Principal Economist at HDFC Bank in Gurugram, said the Reserve Bank of India’s rate cut aligned with expectations, noting the central bank acted proactively to cushion the economy from emerging growth risks.

“As we expected, the RBI delivered a rate cut recognising the impending risks to growth and utilising the monetary space yielded by low inflation,” she said.

Gupta added that the RBI took a “forward-looking view” as inflation is projected to remain below 4% until the second quarter of FY27, giving policymakers room to support activity.

HDFC Bank has left its forecasts unchanged, expecting:

• GDP growth of 7.3% in FY26 and 6.5% in FY27
• Inflation at 2% in FY26 and 4% in FY27

Market impact: Neutral; commentary reinforces expectations of a gradual, supportive policy stance.

The Reserve Bank of India (RBI) delivered a 25-basis-point rate cut on Friday, lowering the repo rate to 5.25% in a unanimous decision by its six-member monetary policy committee.

The move was widely expected and reflects the central bank’s effort to maintain a “goldilocks economy” — one with stable inflation and moderate, sustainable growth.

Alongside the rate cut, the RBI also announced measures to boost banking-sector liquidity by up to $16 billion, aiming to support credit conditions and strengthen financial stability.

The central bank kept its stance neutral, leaving the door open for potential further easing if economic conditions soften.

Market impact: Bearish for INR, bullish for equities and bonds; easier policy and additional liquidity typically support domestic assets while pressuring the currency.