Crisil Ratings’ latest report forecasts a steady hand from the RBI’s MPC on policy rates in fiscal 2027, driven by anticipated mild CPI inflation upticks from steadying food prices. This outlook underscores a balanced approach to monetary policy amid evolving economic dynamics.
Offsetting the food inflation rise are low global oil prices and GST cut dividends early in the year, keeping non-food inflation tame. Such dynamics reduce the urgency for rate tweaks.
GDP growth for FY27 is projected at a solid 6.7% on the 2011-12 series, tracking typical patterns. While deflator expansions could squeeze real terms, government’s capex surge and private capex revival promise robust propulsion.
The rupee benefits from US-India trade deal prospects and FPI inflows resurgence, with stabilization eyed at 89 per dollar come March 2027.
Net FPI investments hit $2.8 billion in February through the 16th, propelling the rupee from 92 at January’s close to 90.7, easing forex strains effectively.
Rate holds notwithstanding, hike spillovers maintain pressure on economy-wide rates. The FCI’s stable -0.5 in January signals slight tightness versus norms, countered by RBI’s liquidity infusions.
OMOs and swap mechanisms have buttressed liquidity, while 125 bps cuts in the easing phase have trimmed borrowing costs, invigorating credit growth and economic vitality.