RBI Governor Sanjay Malhotra said India's CPI inflation remains below the central bank's target but is showing an upward bias toward the upper tolerance level.
The statement comes as the Reserve Bank of India balances the need for price stability against global economic shocks that could trigger domestic price hikes.
During the Monetary Policy Committee meeting this week, the RBI kept the repo rate unchanged at 5.25% [2]. The decision follows a period of volatility in consumer prices, with the April 2026 CPI inflation rate reaching 3.48% [1].
Malhotra said that while global shocks have occurred, the pass-through to domestic prices has remained limited. However, the governor said that future projections indicate a shift in the trend.
"CPI inflation remains below the target, despite global shock, as the pass through to domestic prices has been limited, while the baseline projections point towards headline inflation firming up towards the upper tolerance level," Malhotra said.
The RBI's target for inflation is typically centered around 4%, with a tolerance band. The current trend suggests that while the 3.48% figure [1] is technically below that target, the trajectory is moving higher, a development that may influence future interest rate decisions.
Malhotra said that the committee is monitoring these baseline projections closely to ensure that inflation does not breach the upper limits of the bank's acceptable range.
“CPI inflation remains below the target, despite global shock”
The RBI's decision to hold the repo rate steady while acknowledging an upward bias suggests a cautious approach to monetary policy. By signaling that inflation is moving toward the upper tolerance level, the governor is preparing markets for a potential period of tighter policy if domestic prices begin to mirror global inflationary pressures more aggressively.
