RBI's Inflation Forecast Set for Revision Amid Growth Concerns

The Reserve Bank of India is likely to update its inflation forecasts upwards and highlight GDP growth risks in its latest policy review. Inflation from April to September 2026 could exceed initial predictions, while global issues and high crude oil prices pose threats to the country's economic growth prospects.

The Reserve Bank of India (RBI) is anticipated to revise its inflation forecasts upwards while pointing out potential GDP growth threats in its forthcoming policy review, as reported by PhillipCapital.

The report notes the RBI's current projection of a 4.1% inflation rate for April to September 2026. However, expectations are set for an upward revision, with future guidance potentially emerging for the October to March period.

During the policy meeting set for February 6, 2026, the RBI's earlier estimates pegged CPI inflation at 4% for Q1 and 4.2% for Q2 of the same year, collectively amounting to 4.1% for the first half. The report highlights the significance of updated projections amidst shifting global dynamics.

Uncertainty surrounds the extent of the expected revision. The report suggests that a slight increase, such as to 4.3% or 4.4%, might not impact the market greatly, but reaching nearer the 5% mark could set the market in motion.

Addressing growth concerns, the report points to global challenges affecting GDP and inflation, notably high crude oil prices and currency fluctuations. Real GDP is predicted to grow 7.1%, though risks persist due to geopolitical tensions and their influence on investment and trade.

The report stresses that assumptions about crude prices and the exchange rate will be pivotal to the RBI's forecasts, which will reflect these revised levels. The April 8 policy review holds increased importance against a backdrop of global turmoil, particularly in West Asia.