Reserve Bank of India (ANI image)
The Reserve Bank of India (RBI) is likely to keep key policy interest rates unchanged at its upcoming monetary policy review scheduled for February 4–6, as inflation has begun to edge up, ratings agency Crisil said on Monday.The Monetary Policy Committee (MPC) had cut the repo rate by 25 basis points to 5.25 per cent in its December meeting and maintained a neutral stance, signalling that future decisions would remain data-driven. Since then, inflationary conditions have shown early signs of firming, according to news agency ANI. “We expect the RBI to stay put on policy rates given the creep up in inflation,” Crisil said in a report.India’s retail inflation rose to 1.33 per cent in December from 0.71 per cent in November, marking a moderate uptick, though it continues to remain below the RBI’s target range of 2–4 per cent.In December, RBI Governor Sanjay Malhotra described the current economic environment as a “rare goldilocks period”, characterised by strong growth alongside unusually low inflation. Reflecting this momentum, the central bank raised its GDP growth forecast for the current financial year to 7.3 per cent, citing robust performance in the July–September quarter.Looking ahead, however, Crisil expects economic growth to moderate in the next financial year. The agency forecasts GDP growth of 6.7 per cent in the coming fiscal year, compared with the first advance estimate of 7.4 per cent for the current year.“Challenging global trade environment, moderating domestic fiscal support and waning support from statistical factors, namely a low base and this fiscal’s low deflator, are expected to drag growth next fiscal. However, nominal growth is expected to be higher due to rising inflation,” Crisil said.According to the National Statistics Office’s first advance estimates, India’s real GDP is expected to grow 7.4 per cent in the current fiscal year 2025–26, up from 6.5 per cent in the previous year.On inflation, Crisil projects retail inflation to rise to 5.0 per cent in the next fiscal year 2026–27, from an estimated 2.5 per cent in the ongoing fiscal.“Low food inflation of this fiscal should lend a statistical lift to inflation next year. However, softer commodity prices and continued impact of the Goods and Services Tax rationalisation should keep inflation within the RBI’s target band,” it said.Crisil also expects crude oil prices to remain subdued. It projects oil prices to average between USD 62 and USD 67 per barrel in the current fiscal year and between USD 60 and USD 65 per barrel in calendar year 2026. Brent crude averaged USD 62.7 per barrel in December, down 1.4 per cent from the previous month and 15.1 per cent lower than a year earlier.
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