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Below Report on RBI Monetary Policy by Mr. Siddarth Bhamre, Head - Institutional Research Asit C. Mehta Investment Interrmediates Limited

Overview Summary:

Economic Outlook

1. Upward Revision in GDP Growth

* FY26 GDP growth forecast increased to 7.3% from 6.8% earlier.

* Q2FY26 GDP growth is supported by festive demand and GST rationalization.

2. Downward Revision in Inflation

* FY26 inflation forecast lowered to 2.0%.

* Q2FY27 inflation expected at 4.0%, mainly due to declining food prices.

3. Liquidity Measures

RBI to conduct:

* OMO purchases of government securities worth Rs 1 lakh crore.USD/INR Buy-Sell swap of USD 5 billion to add liquidity.

Credit Offtake Trends

* Credit offtake had bottomed in May 2025 after regulatory changes.

* Some improvement seen since then, but credit growth remains weak relative to the high GDP growth.

* Bank credit growth/real GDP growth stood at 1.3x, below the long-term average of 1.8x.

* Sustained improvement in credit demand is needed for growth to be durable.

Current Rates

Policy Rates

* Repo Rate: 5.25%

* SDF Rate: 5.00%

* MSF/Bank Rate: 5.50%

* Reverse Repo Rate: 3.35%

Reserve Ratios

* CRR: 3.00%

* SLR: 18.00%

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