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Thu, 03 Sept 2026
10:04:19 pm
Thu, 03 Sept 2026
10:04:19 pm
Rudransh Sangwan
Published at: June 5, 2026, 10:24 AM
Synopsis
RBI MPC June 2026: Repo rate held at 5.25%, FY27 GDP growth forecast cut to 6.6%, inflation outlook raised to 5.1%. Check full RBI policy analysis, market impact, growth outlook, inflation risks, and expert insights.
The Reserve Bank of India (RBI) delivered one of the most closely watched monetary policy decisions of 2026 by keeping the repo rate unchanged at 5.25%, while simultaneously lowering India's economic growth forecast and raising its inflation outlook for FY27.
The decision, announced by RBI Governor Sanjay Malhotra following the latest Monetary Policy Committee (MPC) meeting, reflects growing concerns over inflationary pressures, global geopolitical uncertainty, elevated crude oil prices, and slowing economic momentum.
While the central bank chose to maintain policy stability, the revised projections suggest that India's growth-inflation balance is becoming increasingly challenging amid a volatile global economic environment.
| Policy Measure | Previous | Latest |
|---|---|---|
| Repo Rate | 5.25% | 5.25% |
| Standing Deposit Facility (SDF) | 5.00% | 5.00% |
| Marginal Standing Facility (MSF) | 5.50% | 5.50% |
| Bank Rate | 5.50% | 5.50% |
| FY27 GDP Growth Forecast | 6.9% | 6.6% |
| FY27 Inflation Forecast | 4.6% | 5.1% |
The MPC voted unanimously to keep rates unchanged, signaling a cautious approach amid rising inflation concerns and external risks.
The central bank's decision reflects a delicate balancing act between supporting economic growth and controlling inflation.
Several factors influenced the MPC's stance:
| Key Driver | Impact |
|---|---|
| Rising Crude Oil Prices | Inflationary |
| Middle East Geopolitical Risks | Inflationary |
| Global Growth Uncertainty | Growth Negative |
| Food Price Volatility | Inflationary |
| Domestic Demand Moderation | Growth Negative |
| Financial Stability Considerations | Neutral |
With inflation risks rising and economic growth slowing, the RBI opted for a wait-and-watch approach rather than implementing further rate changes.
One of the biggest announcements from the policy meeting was the reduction in India's GDP growth forecast.
Governor Malhotra stated that real GDP growth for FY27 is now projected at 6.6%, compared with the earlier estimate of 6.9%.
| Fiscal Year | Earlier Forecast | Revised Forecast |
|---|---|---|
| FY27 | 6.9% | 6.6% |
The 30-basis-point downgrade reflects concerns regarding:
Despite the downgrade, India continues to remain among the fastest-growing major economies globally.
While growth projections were lowered, inflation expectations moved higher.
The RBI increased its FY27 inflation projection by 50 basis points to 5.1%.
| Metric | Earlier Estimate | New Estimate |
|---|---|---|
| FY27 CPI Inflation | 4.6% | 5.1% |
The increase primarily reflects:
The revised estimate moves inflation further away from RBI's medium-term target of 4%.
Crude oil remains one of the biggest risks for India's economy.
The recent surge in global oil prices due to Middle East tensions has increased concerns regarding:
India imports more than 85% of its crude oil requirements, making the economy highly sensitive to global energy price fluctuations.
Since the repo rate remains unchanged:
Banks are unlikely to significantly change lending rates in the near term.
Businesses continue benefiting from relatively stable financing conditions despite economic uncertainty.
Fixed deposit investors are expected to continue enjoying attractive deposit rates.
Banks have already increased deposit rates substantially over the past two years, and the RBI's decision supports maintaining these elevated levels.
| Sector | Impact |
|---|---|
| Banking | Positive |
| NBFCs | Positive |
| Real Estate | Positive |
| Infrastructure | Neutral |
| Automobiles | Neutral |
| FMCG | Slightly Negative |
| Aviation | Negative |
| Oil Marketing Companies | Mixed |
Rate stability generally supports banking, housing finance, and real estate sectors.
Investors will now closely monitor:
These factors will influence future RBI policy decisions during FY27.
| Indicator | Status |
|---|---|
| Repo Rate | 5.25% |
| SDF Rate | 5.00% |
| MSF Rate | 5.50% |
| FY27 GDP Forecast | 6.6% |
| FY27 Inflation Forecast | 5.1% |
| MPC Vote | Unanimous |
| Policy Stance | Cautious |
The RBI's latest policy decision indicates that inflation has once again become the primary concern for policymakers. While economic growth remains healthy by global standards, rising energy prices and geopolitical uncertainties are forcing the central bank to adopt a more cautious outlook.
The simultaneous reduction in growth forecasts and increase in inflation projections highlights the growing challenge of balancing economic expansion with price stability.
For investors, businesses, and consumers, the message is clear: interest rates may remain stable for now, but inflation risks remain elevated and will continue to influence monetary policy decisions throughout FY27.
The RBI's June 2026 monetary policy decision reflects a cautious and balanced approach amid a complex economic backdrop. By maintaining the repo rate at 5.25%, lowering FY27 GDP growth forecasts to 6.6%, and increasing inflation projections to 5.1%, the central bank has signaled that inflation risks are rising even as economic momentum moderates.
Going forward, crude oil prices, global economic conditions, inflation trends, and geopolitical developments will remain the key factors shaping India's monetary policy trajectory.
The RBI maintained the repo rate to balance slowing economic growth with rising inflation risks and global uncertainties.
The RBI has lowered India's FY27 GDP growth forecast from 6.9% to 6.6%.
The RBI has increased its inflation projection by 50 basis points to 5.1%.
Since the repo rate remains unchanged, home loan EMIs are expected to remain stable in the near term.
Rising crude oil prices, geopolitical tensions, imported inflation, and global economic uncertainty remain the primary risks.
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