Inflation – The Reserve Bank of India is expected to closely assess inflation trends in the coming months before making any significant policy adjustments in the 2026–27 financial year, particularly as a revised Consumer Price Index series prepares to take effect.

According to a recent report by SBI Research, the introduction of the updated CPI data could influence future decisions on interest rates and liquidity management. The government has scheduled the release of the new CPI series, with 2024 as the base year, for February 12, 2026.

Revised Economic Data Framework to Guide Policy

The Ministry of Statistics and Programme Implementation is currently updating the base year for several key macroeconomic indicators, including CPI, Gross Domestic Product, and the Index of Industrial Production. These indicators serve as critical reference points for the RBI while framing monetary policy.

Economists believe that once the revised data series becomes operational, it may provide a clearer picture of inflation dynamics and economic activity. Until then, policymakers are likely to remain cautious in altering the existing stance.

RBI Keeps Repo Rate Unchanged

In its latest meeting, the Monetary Policy Committee of the Reserve Bank of India voted unanimously to retain the repo rate at 5.25 percent. The central bank also chose to maintain a neutral policy stance, signalling a balanced approach between supporting growth and containing inflation.

The decision comes amid relatively stable price conditions and improving growth indicators. SBI Research noted that factors such as Goods and Services Tax rationalisation, encouraging rabi crop prospects, and a benign inflation environment have contributed to a more optimistic growth outlook.

Growth Outlook Revised Upward

The GDP projection for the first quarter of 2026–27 has been raised to 6.9 percent, while the second quarter is expected to see growth of around 7 percent. The improved outlook reflects steady domestic demand and stable macroeconomic conditions.

Meanwhile, retail inflation measured through CPI is estimated at 2.1 percent for 2025–26. The fourth quarter inflation rate is projected at 3.2 percent. Analysts attribute a marginal upward revision in the annual inflation forecast to higher prices of precious metals.

Rupee Movement and RBI Intervention Strategy

The Indian rupee strengthened noticeably following the policy announcement. Market observers described the currency movement as somewhat unexpected. SBI Research suggested that the central bank could consider rebuilding foreign exchange reserves if the rupee appreciates below the 90 mark against the US dollar.

The RBI regularly intervenes in currency markets to maintain stability. It typically purchases dollars when the rupee is firm and sells them during periods of sharp depreciation to manage volatility and liquidity conditions.

Focus on Banking Regulation and Fraud Prevention

Beyond interest rates, the central bank has also signalled a renewed focus on regulatory reforms. Recent measures include reviewing cross-selling practices, improving oversight of loan recovery agents, and establishing clearer compensation mechanisms for customers affected by small-value fraudulent transactions.

A discussion paper aimed at curbing digital payment fraud is also in the works. The proposal explores safeguards such as delayed credit mechanisms to prevent misuse and enhance consumer protection.

Data cited by SBI Research indicates that reported banking fraud cases have risen from 13,494 in 2022–23 to 23,879 in 2024–25, highlighting the growing need for tighter monitoring and systemic safeguards.

Boost for REIT Financing and Small Enterprises

In a move seen as supportive of infrastructure financing, the RBI has permitted banks to extend lending to Real Estate Investment Trusts on par with Infrastructure Investment Trusts. Financial institutions may now fund operational projects through REIT structures or take equity exposure. Analysts say this aligns with broader efforts to monetise public sector assets and improve capital flows into the sector.

Additionally, the central bank has doubled the limit for collateral-free loans available to micro and small enterprises from Rs 10 lakh to Rs 20 lakh. The enhancement is expected to improve credit access for smaller businesses and strengthen the MSME ecosystem.

As policymakers await the rollout of the new CPI framework, inflation trends and macroeconomic stability are likely to remain central to monetary policy decisions in the coming fiscal year.