Inflation in FY26 and FY27 is expected to remain far below the Reserve Bank of India’s (RBI) estimates, according to a new report by the State Bank of India (SBI).The report cited several factors that will help to soothe price pressures, including a strong monsoon, higher kharif crop sowing, healthy reservoir levels, ample foodgrain stocks, and the major factor of rationalisation of GST rates, which were implemented recently.Considering these factors, the RBI had already lowered its CPI inflation forecast for FY26 by 50 basis points to 2.6%, marking a 160 basis point reduction from its April projection. However, in the new report, SBI suggests that inflation could be even lower, in both the current and the upcoming financial year.“RBI has revised downwards its FY26 CPI inflation projection by 50 bps to 2.6 per cent (a 160 basis point downward revision from April levels). We believe both FY26 and FY27 inflation numbers are likely to be much lower,” SBI said in the report cited by ANI.The report also noted that RBI increased its real GDP growth estimate for FY26 to 6.8%, while inflation for FY27 is projected at 4.5%.Amid global economic uncertainty and market volatility, the Monetary Policy Committee’s (MPC) decision to keep the policy rate unchanged was seen as reasonable from a regulatory vision. The report also defended MPC’s decision to keep rates unchanged, saying that shows rare flexibility that extends beyond monetary policy.This approach, SBI said, is supported by enough liquidity and a stable external sector, despite ongoing uncertainties. It also emphasised that clear communication is key for guiding expectations and maintaining policy clarity. SBI said that the apex bank might have left some room for future rate cuts, although the timing remains uncertain. India’s financial system is well positioned to benefit from the forward-looking reforms aimed at strengthening the country’s global position and reinforcing its economic resilience, the report added.