Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said the decision to introduce a core inflation forecast should not be seen as a change in the way monetary policy is conducted.
“Having a core inflation forecast has been a request from market participants, but it should not be seen as a shift in monetary policy making,” he said.
Introduced after new inflation framework
Malhotra said the timing of introducing the core inflation forecast was appropriate as it comes after the rollout of the new flexible inflation targeting (FIT) framework.
Headline inflation remains key focus
Despite introducing the new forecast, Malhotra stressed that the RBI’s primary objective remains keeping headline inflation aligned with the 4 per cent target under the inflation-targeting framework.
“Our target is to ensure that headline inflation remains in line with the goal of 4 per cent,” he said.
The governor also clarified that the central bank does not rely on a single measure of inflation when deciding policy rates. “We will continue to look at all CPI components before taking a decision on the repo rate,” he said.
Repo rate could move either way
“We have a neutral stance, but the repo rate can move in either direction. It’s possible that low rates continue for a long time,” he said.
RBI MPC April: Repo rate unchanged
The RBI’s Monetary Policy Committee on Wednesday kept the repo rate unchanged at 5.25 per cent in its first policy review for the financial year 2026-27 (FY27).
The committee also retained the ‘neutral’ stance. The standing deposit facility (SDF) rate was kept at 5 per cent, while the marginal standing facility (MSF) rate and the bank rate were maintained at 5.5 per cent.
Malhotra said India’s real GDP growth for FY27 is projected at 6.9 per cent.
“Global growth faces increasing downside risks as the sharp rise in energy prices and shortages of inputs have stoked inflation fears,” the RBI Governor said.
The RBI has projected CPI inflation for FY27 at 4.6 per cent.