With reference to Nomura's forecast on India's Consumer Price Index (CPI), consider the following statements: 1. The CPI is expected to ease to 3% after FY27. 2. The CPI is expected to be 5.2% for FY27. 3. There is a 50% probability of a rate hike by December. Which of the statements given above is/are correct?

The RBI is set to hold its Monetary Policy Committee

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 28 September 2026

Monetary policy and inflation targeting: a core GS3 topic regarding RBI's role in price stability.

Why in news

The RBI is scheduled to hold its Monetary Policy Committee meeting from October 5 to October 7, amid Nomura's report suggesting a potential rate hike due to high oil and food prices.

Background

Nomura's report indicates an 80% chance of the RBI hiking rates by 25-50 basis points by December. The brokerage forecasts India's Consumer Price Index (CPI) at 5.2% for FY27, easing to 4% thereafter.

Facts for Prelims

FactNomura's forecast: India's CPI is expected to be 5.2% for FY27.
FactNomura's forecast: India's CPI is expected to ease to 4% after FY27.
FactNomura's projection: 80% probability of a 25-50 basis point rate hike by December.

Prelims practice question

With reference to Nomura's forecast on India's Consumer Price Index (CPI), consider the following statements:

The CPI is expected to ease to 3% after FY27.
The CPI is expected to be 5.2% for FY27.
There is a 50% probability of a rate hike by December.

Which of the statements given above is/are correct?

(a)2 only
(b)3 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (a) 2 only — Statement 2 is correct. Statement 1 is incorrect: The note states it is expected to ease to 4%. Statement 3 is incorrect: The note indicates an 80% probability.

For Mains

Q. Discuss the challenges in managing inflation in India amidst volatile global oil prices and domestic food price fluctuations.

Dimensions to cover in your answer

Monetary transmission: Lag in interest rate adjustments affecting rural and small-scale lending
Supply-side shocks: Ineffectiveness of interest rate hikes against non-monetary food price spikes
Inflation targeting: Balancing the 4% target with the necessity of supporting industrial growth

Keywords: Monetary Policy · Inflation Targeting · Basis Points · Consumer Price Index · Supply-side shocks

Full chronology for revision →Read the full news →Report a mistake in this note Source: Economic Times ↗

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