Borrowers will have to wait longer! Interest rates may remain stable in FY27 also, know the new report of RBI

Reserve Bank Of India: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is likely to keep the policy interest rates steady in FY 2027, as there is a possibility of a slight increase in consumer price index (CPI) based inflation. CRISIL Ratings report released on Tuesday said that CPI may rise due to normalization of food inflation, however, non-food inflation may remain under control due to lower crude oil prices and the benefit of GST cut in the first half of the year.

According to the report, the economic growth rate is expected to remain around the normal trend. Based on the 2011-12 series, the growth rate of gross domestic product (GDP) is estimated to be 6.7 percent in the financial year 2027.

Rupee strengthens on India-US trade teal

The agency said a possible rise in the deflator may put some pressure on real growth, but signs of improvement in central government capital spending and private investment will provide impetus to the economy. The report also said the rupee has been strengthened by the US-India trade agreement and signs of return of foreign portfolio investors (FPIs), and estimates the rupee to stabilize at 89 per dollar by March 2027.

Foreign investors returned to the domestic market

As of February 16, FPIs invested a net amount of $2.8 billion in the month of February, which reduced the pressure on the rupee. The rupee has strengthened from around 92 per dollar at the end of January to around 90.7. Although the chances of change in policy rates are low, the impact of earlier rate hikes will continue on the interest rates in the economy.

The CRISIL Financial Conditions Index (FCI) remained stable at -0.5 in January, indicating that financial conditions are slightly tighter than the long-term average, but the situation remains balanced due to the RBI’s actions.

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Bank loan increase got support

The report said that the purchase of government securities by the RBI under Open Market Operation (OMO) and dollar-rupee Buy-sell swaps provided liquidity to the system. In the current easing cycle, a rate cut of 125 basis points (bps) brought down lending rates, supporting bank credit growth.