RBI MPC Keeps Repo Rate Unchanged at 5.25%, Lowers GDP Growth Forecast to 6.6%

The Reserve Bank of India's Monetary Policy Committee voted unanimously to keep the repo rate unchanged at 5.25% at its June 2026 meeting, holding for a third straight session while retaining its neutral stance. Governor Sanjay Malhotra framed the decision as a cautious pause after the central bank delivered 125 basis points of cuts between February and December 2025.

The committee paired the hold with a more defensive set of forecasts. It trimmed its FY27 real GDP growth projection to 6.6% from 6.9%, with quarterly growth seen easing to 6.3% in Q2 before recovering to 6.8% by Q4. At the same time it raised its FY27 CPI inflation forecast by roughly 50 basis points to 5.1% from 4.6%, and flagged a Q3 peak of about 5.9%.

The RBI cited a thicket of external pressures: elevated crude import costs and geopolitical uncertainty tied to the conflict in West Asia, a rupee that weakened toward 97 per dollar, and persistent foreign portfolio outflows. On the domestic side, officials singled out a weak monsoon and El Nino conditions as the main upside risk to food inflation.

The combination of slower growth and firmer inflation leaves the RBI boxed in: little room to cut without stoking prices, and limited appetite to hike while activity softens. Investors in Indian equities, bonds and the rupee could watch the next meeting for any shift away from the neutral stance, which would be the clearest signal of where policy heads into the second half of FY27.