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Informist, Friday, Jun. 5, 2026

 

MUMBAI – Gaurav Kapur, chief economist, IndusInd Bank, said the following on the Reserve Bank of India's second bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Friday:

 

The decision to maintain status quo on the Repo rate and to continue with the Neutral stance is as expected. The 50-bps upward revision in the baseline CPI inflation forecast with risks seen on the upside have strengthened the case of rate hike in the next meeting.

 

Real repo rate based on the revised inflation forecast is now well below the real neutral policy rate, indicating that monetary tightening will have to be pursued in a calibrated manner going forward. That said, monetary policy will essentially respond to the passthrough of imported inflation to the headline CPI inflation without exerting undue pressure on growth.

 

While supply-side inflation pressures have increased, demand-side pressures remain benign, especially if we consider core inflation, excluding the precious metals inflation. Measures announced to boost capital inflows, along with government decision to exempt tax on FPI (foreign portfolio investor) debt investments, will help stabilise the exchange rate by attracting capital and shoring up forex reserves.  End

 

Compiled by Meera Nair
Filed by Rajeev Pai

 

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