Mumbai, May 31: The Reserve Bank of India (RBI) is widely expected to keep its benchmark repo rate unchanged at 5.25 per cent when the Monetary Policy Committee (MPC) concludes its three-day meeting on June 5, amid growing global uncertainties and concerns over inflationary pressures.
The six-member MPC, chaired by RBI Governor Sanjay Malhotra, will meet from June 3 to June 5 to review the country’s monetary policy. Economists and market participants believe the central bank is likely to maintain the status quo on interest rates while closely monitoring geopolitical developments, particularly tensions in West Asia, and their impact on inflation, commodity prices and economic growth.
The RBI had also left interest rates unchanged during its previous policy review in April, citing uncertainties arising from global geopolitical conditions and their potential consequences for India’s economic outlook.
While no change in rates is expected, analysts believe the central bank may revise its macroeconomic projections. Rising crude oil prices, persistent supply chain disruptions and pressure on the rupee could lead the RBI to increase its inflation forecast and moderate its growth projections for the current financial year.
A recent report by the State Bank of India’s economic research department also suggested that the RBI is likely to maintain its current policy stance in view of the volatile global environment.
According to the report, consumer price inflation is expected to remain above 5 per cent for the next three quarters, although inflation during the current quarter may stay within the 4 to 4.1 per cent range.
The report projects India’s real GDP growth at around 7.2 per cent in the fourth quarter of FY26 and estimates overall economic growth for FY26 at 7.5 per cent. However, it cautioned that prolonged geopolitical tensions and external economic shocks could affect these projections and necessitate revisions in the future.
For FY27, SBI economists have estimated GDP growth at 6.6 per cent, while noting that the forecast remains subject to changes in the global economic and geopolitical landscape.
The report emphasised that the RBI should continue adopting a data-driven approach and maintain the current policy rate for the time being. It also pointed out that if inflationary pressures intensify, the central bank has several alternative tools available, including liquidity management measures such as Operation Twist, to support market stability without altering benchmark interest rates.
With inflation risks and global uncertainties remaining key concerns, all eyes are now on the RBI’s policy announcement on June 5 for signals on the future direction of monetary policy.
