RBI Expected To Maintain Status Quo On Rates Till October: Bank Of Baroda

New Delhi, Jul 14 (KNN) The Reserve Bank of India (RBI) is likely to keep policy interest rates unchanged until at least October 2026, while India's economy is expected to grow at a steady 6.6-6.8 percent in FY27 despite global uncertainties, according to Bank of Baroda's FY27 Economic Outlook.

RBI Expected To Hold Rates Till October

The bank said it does not expect any change in the policy rate before October 2026, although a rate hike later in the financial year cannot be ruled out depending on evolving economic conditions.

It projected retail inflation at 5.0-5.2 percent in FY27, up from 2.1 percent in FY26, but within the RBI Monetary Policy Committee's tolerance band. The repo rate is expected to remain in the 5.25-5.50 percent range during the year, reported ANI.

Economic Growth To Remain Resilient

Bank of Baroda forecasts India's GDP growth to moderate from 7.7 percent in FY26 to 6.6-6.8 percent in FY27, while nominal GDP growth is expected to return to double digits at 10-11 percent, supported by resilient domestic demand.

The report assumes that the impact of the ongoing West Asia conflict will persist over the next six months, with crude oil prices averaging USD 75-85 per barrel during FY27.

Oil Prices, Monsoon Among Key Risks

It identified higher crude oil prices, global supply chain disruptions and weaker export growth as the principal downside risks to the economy. The report also cautioned that a weak monsoon could push up prices of food items such as pulses and cereals, adding to inflationary pressures.

Mixed Outlook For Industrial Sectors

On the industrial front, manufacturing growth is projected at 6.5-7.5 percent, while industrial production is expected to expand by 3-4 percent, reflecting the impact of base effects, supply chain constraints and softer global demand.

The bank said petrochemicals, food processing, glass and ceramics, textiles and chemicals could face pressure from elevated input costs and supply bottlenecks. In contrast, machinery, automobiles, metals, infrastructure and construction are expected to remain relatively strong.

Domestic Demand To Support FY27 Growth

Bank of Baroda also projected the current account deficit to widen to 1.8-2.0 percent of GDP in FY27 from 0.6 percent in FY26. The fiscal deficit is estimated at 4.7-4.8 percent of GDP, while credit growth is expected at 11-13 percent and deposit growth at 10-12 percent.

Despite global headwinds, the report identified continued government capital expenditure, a recovery in private investment, robust services exports, bilateral trade agreements and the resilience of the services sector as key drivers supporting India's economic growth in FY27.

(KNN Bureau)