While the Reserve Bank of India (RBI) held the policy repo rate steady for a third straight meeting, it raised its inflation forecast for FY27 by 50 basis points to 5.1%. However, most economists still anticipate the central bank will begin tightening in the second half of the year. Sakshi Gupta, principal economist, HDFC Bank, said policy could be assessed as slightly hawkish given the 50bps upward revision in the inflation forecast to 5.1% for FY27. “This raises the likelihood of the rate hike cycle beginning by the October policy. We estimate a cumulative 50bps rate increase in FY27.” She added that the central bank recognised the downside risks to growth due to supply chain disruptions and increase in price pressures.