RBI likely to stay on prolonged rate pause in FY27 amid robust growth, easing inflation: Report
New Delhi: The Reserve Bank of India is likely to maintain a prolonged pause on policy rates in FY27 as resilient economic growth and easing inflation provide room for the central bank to stay on hold, a report has said.
A report from SBI Research said the communication from the central bank showed a clear acknowledgement of risks with members adopting a more hawkish tone but the underlying data did not yet warrant an immediate rate hike.
“We believe growth is most likely to remain robust as shown by all leading indicators,” it added and maintained its view of a prolonged pause in FY27.
In addition, CPI inflation for July came in at 4.45 per cent broadly in line with market expectations, while imported inflation also eased and declined to 7.3 per cent in July 2026 from 8.1 per cent in June.
SBI Research has expected inflation to rise to around 4.7 per cent in August and could briefly move above 6 per cent in October and November before moderating to around 5 per cent in the fourth quarter of FY27.
Moreover, the report also highlighted improving monsoon conditions.
Despite a rainfall deficit of around 40 per cent in June surplus showers in July and normal rainfall in August have reduced the nationwide shortfall to roughly 13 per cent.
The positive Indian Ocean Dipole (IOD) could also help offset some of the impact of the ongoing El Nino, the report said.
Despite deficient rainfall in some major foodgrain-producing states, kharif sowing is only around 2 per cent below last year’s level, indicating improved irrigation facilities across states, it said.
It further noted that markets should therefore attach a premium to pragmatic policy action.
On the global front, SBI Research noted that central banks across the world were grappling with communication challenges.
It also said the US Federal Reserve’s move to smoothen the long end of the Treasury curve and increase government debt repurchases had contributed to a decline in longer-term yields.