Monetary Policy Review — RBI Acknowledges Limitations Of Policy Easing: Read Systematix Report
The RBI's growth forecast is heavily reliant on resilient demand in less productive rural areas, despite stagnant urban demand
(Source: Vijay Sartape/ NDTV Profit)
The RBI's outlook for growth remains steady, projecting an average growth rate of 6.5% for FY26, with quarterly estimates closely aligning with this figure. While the RBI's expression of optimism regarding growth is derived from factors such as a strong monsoon season, increasing capacity utilization, and supportive monetary, regulatory, and fiscal policies, the decision to ease monetary policy and provide excess liquidity is primarily influenced by the current inflation situation.
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Systematix Report
The Reserve Bank of India has decided to keep the policy repo rate unchanged at 5.5%, maintaining its current policy stance. This decision was anticipated, especially after the central bank implemented a front-loading of rate cuts totaling 100 basis points since February 2025 and injected liquidity into the system. The effects of these measures are expected to influence growth only with a lag.
The RBI's outlook for growth remains steady, projecting an average growth rate of 6.5% for FY26, with quarterly estimates closely aligning with this figure.
While the RBI's expression of optimism regarding growth is derived from factors such as a strong monsoon season, increasing capacity utilization, and supportive monetary, regulatory, and fiscal policies, the decision to ease monetary policy and provide excess liquidity is primarily influenced by the current inflation situation. Inflation is projected to average lower at 3.1% in FY26, with an upward trend anticipated at 4.4%.
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