Summary:

Crisil expects CPI-based inflation to average 4% in FY26, down from 4.6% in FY25, owing to positive food inflation and decreased commodity prices. IMD's above-normal monsoon forecast supports this prognosis. CPI is the primary measure for the RBI's Monetary Policy Committee. Crisil forecasts 6.5% GDP growth, boosted by repo rate decreases and favourable monsoons, however global issues such as US tariff hikes might hurt exports and provide negative risks.

According to the research, while supporting liquidity benefits the banking sector, capital flows and the currency may remain volatile due to global uncertainty. Bank credit growth slowed significantly in Q1 FY26, according to statistics from May 2025. Crisil forecasts lowering inflation to allow for one more repo rate drop this fiscal year, followed by a pause. However, rising crude oil prices may put pressure on bond rates, equities markets, and the currency, jeopardising overall economic stability.

Source: IBEF

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