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CareEdge Ratings Chief Economist Rajani Sinha on RBI Policy
This story was originally published at 12:10 IST on 5 August 2026
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MUMBAI - Rajani Sinha, chief economist, CareEdge Ratings, said the following on the Reserve Bank of India's third bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Wednesday:
RBI's MPC decision to leave the policy rate unchanged was in line with our expectations. However, the tone of the policy was more dovish than we expected. The Central Bank highlighted that while the core inflation has risen, core inflation excluding precious metals remains benign. The central bank sounded quite confident on the growth front with a sharp upward revision in Q1 GDP growth estimate. Overall GDP growth has been marginally revised upwards, bringing it in line with our projection of 6.7% for FY27. While the central bank highlighted the monsoon concerns, overall CPI inflation projection has been marginally reduced lower to 5% for FY27, again this is in line with our projection.
We expect status quo in the policy rate to be maintained in the current fiscal year, unless the inflationary risks aggravate. With food inflation likely to peak in Q3 FY27, the real rate of interest could turn negative temporarily. However, the central bank may look through it as long as there are no indications of the pricing pressure getting broad-based. In the fluid global and domestic environment, the central bank may prefer to remain growth supportive.
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Compiled by Divya Moolayattil
Filed by Akul Nishant Akhoury
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