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The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) announced on Friday that inflation has eased, aided by a positive outlook for food prices, and is expected to moderate further in FY26, providing additional relief to Indian households. For the full fiscal year FY26, the RBI has revised its headline inflation projection to 3.7 per cent, down from the 4 per cent estimate made in April.

The latest quarterly inflation forecasts are: 2.9 per cent for Q1, 3.4 per cent for Q2, 3.5 per cent for Q3, and 4.4 per cent for Q4. The central bank noted that inflation risks remain “evenly balanced.”

The governor noted that headline inflation in India eased to a nearly six-year low in April, driven by a decline in food prices. He also mentioned that the fuel basket experienced deflation during March-April. Despite a rise in gold prices, core inflation remained stable in the same period.

RBI Governor Sanjay Malhotra added that while food inflation continues to stay soft, core inflation is also expected to ease further in the coming months.

Repo Rate Cut

In a key move, the Monetary Policy Committee (MPC) lowered the benchmark repo rate by 50 basis points to 5.5 per cent and shifted the policy stance from accommodative to neutral. The governor explained that this early rate cut is intended to stimulate growth.

This adjustment is consistent with projections in the Economic Survey, which had predicted a drop in food inflation during the final quarter of FY25. This marks the RBI’s third consecutive rate reduction in 2025, reflecting its commitment to fostering growth amid easing inflation and ongoing global economic challenges. The governor stressed that despite global uncertainties, the Indian economy continues to perform well on both inflation control and growth.