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RBI's 2027 Inflation Watch: New CPI Series to Reshape Policy Decisions

SBI Research highlights the need for the Reserve Bank of India to closely monitor the inflation trajectory in FY27 as a new Consumer Price Index series with a 2024 base year is set to take effect. The RBI's Monetary Policy Committee recently held the repo rate steady at 5.25% while revising the GDP growth outlook upwards for the coming fiscal year. Concurrently, the central bank announced regulatory reforms, including measures to curb digital payment fraud and an increase in collateral-free loan limits for micro and small enterprises. The report also notes the RBI's strategic currency management and a significant rise in reported banking frauds.

Key Points: RBI's 2027 Inflation Monitoring as New CPI Series Begins

  • New CPI series base 2024 launches Feb 2026
  • RBI holds repo rate at 5.25%, maintains neutral stance
  • GDP growth outlook revised to 6.9-7% for early FY27
  • RBI enhances collateral-free MSE loan limit to Rs 20 lakh
2 min read

Inflation needs monitoring in FY27 as new CPI series kicks in: SBI Research

SBI Research urges RBI to monitor inflation trajectory in FY27 as new CPI series with 2024 base year launches, impacting monetary policy.

"This was again unexpected. It may be again a better option for RBI to recoup dollars when the rupee has appreciated below 90, - SBI Research"

New Delhi, February 7

The trajectory of inflation needs to be monitored before taking a monetary policy call by the Reserve Bank in 2026-27, with the Consumer Price Index series set to come into effect soon, said SBI Research in a report.

The new CPI series with base year 2024 will be released on February 12, 2026, as per the government.

The Ministry of Statistics and Programme Implementation is revising the base year of key macroeconomic indicators. Indicators such as CPI, GDP, and IIP play a vital role in policymaking in RBI.

On Friday, the Monetary Policy Committee of the RBI unanimously decided to keep repo rate unchanged at 5.25 per cent. The MPC also maintained its neutral stance.

Taking into account factors like GST rationalisation, healthy rabi prospects, benign inflation environment, the GDP growth outlook has been revised to 6.9 per cent in Q1 2026-27 and 7 per cent in Q2 2026-27.

Retail or CPI-based inflation for 2025-26 is projected at 2.1 per cent with Q4 CPI at 3.2 per cent. The slight upward revision in the 2025-26 projection is due to an increase in prices of precious metals.

The rupee also rose significantly following yesterday's policy announcements.

"This was again unexpected. It may be again a better option for RBI to recoup dollars when the rupee has appreciated below 90," SBI Research suggested.

The RBI often intervenes by managing liquidity, including selling dollars, to prevent a steep depreciation of the rupee. The RBI strategically buys dollars when the rupee is strong and ideally sells when it weakens.

On the regulatory front, the RBI yesterday focused on reforming current practices on cross-selling, loan recovery methods using agents, and a framework for compensation in cases of small-value fraudulent transactions.

A Discussion Paper to curb fraud in digital payments will explore the implementation of calibrated safeguards, such as lagged credits.

According to SBI Research, the number of banking frauds has increased from 13,494 in 2022-23 to 23,879 in 2024-25.

RBI has permitted lending to REITs in line with InvITs. Banks can now lend to the projects in the operational phase through REITs or can take equity.

"This provision is positive development and furthers Budget announcement for monetizing CPSE assets through REIT structure and flow of fund to the sector," SBI Research report asserted.

In another major announcement, the RBI has decided to enhance the limit of collateral-free loans to MSEs from Rs 10 lakh to Rs 20 lakh.

- ANI

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Reader Comments

R
Rohit P
Increasing collateral-free loans for MSEs to ₹20 lakh is a fantastic move! 🎉 This will really help small business owners like my uncle who runs a workshop. Access to credit is the biggest hurdle. Hope the banks actually implement this smoothly without too much red tape.
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David E
The projected inflation of 2.1% seems optimistic. While the RBI's stance is neutral, I respectfully think they should consider a slight rate cut to boost investment, especially with healthy GDP growth forecasts. Keeping rates unchanged for too long might slow down the momentum.
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Ananya R
The part about banking frauds doubling is alarming! 23,879 cases in 2024-25? 😳 The discussion paper on digital payments can't come soon enough. As someone who uses UPI for everything, stronger safeguards are a must. Lagged credits might be a good idea to prevent instant theft.
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Vikram M
Managing the rupee's strength by buying/selling dollars is smart, but it feels like a never-ending game. A strong rupee is good for imports like oil, but hurts our exporters. Tough balance for the RBI. Glad they are actively intervening to prevent wild swings.
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Sarah B
The revision in GDP growth outlook to nearly 7% is promising. It shows confidence in the economy, especially with the good rabi crop prospects mentioned. The link between agriculture and overall growth is so crucial in India. Fingers crossed the monsoon is cooperative this year too.

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