Mumbai, June 6 (UNI) The Reserve Bank of India (RBI) on Friday lowered its inflation forecast for the financial year 2025-26 to 3.7 per cent, down from the earlier projection of 4 per cent, reflecting the positive impact of easing global commodity prices. This represents one of the most optimistic inflation outlooks in recent years.

Alongside this revision, the RBI reduced its key policy rate by 50 basis points to 5.5 per cent, aiming to support economic growth while keeping inflation in check. Governor Sanjay Malhotra noted that assuming normal monsoon conditions, inflation is expected to remain moderate throughout the year, with quarterly estimates ranging from 2.9 per cent in June to 4.4 per cent by March.

April’s retail inflation eased to 3.16 per cent, the lowest in nearly six years, driven by abundant food supplies and steady core inflation. The RBI highlighted record wheat and pulses production during the Rabi season, coupled with an anticipated above-average monsoon, as factors likely to sustain food availability and moderate prices.

Malhotra emphasized that inflation expectations, especially in rural areas, are trending downward, supported by forecasts of stable crude oil prices and other key commodities. Despite these encouraging signs, the Central bank remains watchful of potential risks from weather variability and tariff-related global price fluctuations.

The RBI’s inflation target remains centered at 4 per cent with a permissible range of plus or minus 2 per cent. Retail inflation has stayed within this band for three consecutive months through April 2025.

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