Overview
- RBI Governor Sanjay Malhotra said on Friday that renewed hostilities in West Asia and a potentially weak monsoon are the principal near-term threats to inflation and growth.
- The central bank raised its FY27 headline inflation forecast to 5.1% from 4.6% after June’s retail inflation jumped to 4.38% and food inflation to 5.32%.
- The RBI kept the repo rate at 5.25% and described it as premature to tighten policy, saying it will wait for incoming data before the Monetary Policy Committee meets August 3–5.
- Malhotra warned that higher crude prices and shipping risks through the Strait of Hormuz matter because India imports almost 90% of its oil, while a weak monsoon could cut crop area and lift food costs.
- Despite risks, the RBI pointed to resilient external buffers such as record gross FDI, a relatively stable rupee, strong bank capital ratios, and it announced a limited liability framework for small-value digital-fraud victims effective January 1, 2027.