RBI Holds Repo Rate at 5.25% Amid Global Uncertainty

The Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously to keep the repo rate unchanged at 5.25% in its June 2026 meeting, marking the fourth consecutive pause. The central bank maintained its neutral policy stance, citing easing retail inflation — which stood at 3.48% in April, below the 4% target for over a year — as justification for holding rates steady while remaining watchful of emerging risks.

Growth Outlook Trimmed as External Pressures Mount

Governor Sanjay Malhotra announced a downward revision of India’s FY27 GDP growth forecast to 6.6%, from the earlier estimate of 6.9%. The cut reflects the weight of global headwinds including supply chain disruptions, heightened geopolitical tensions in the Middle East, and increased market volatility. Malhotra noted that India entered this period of global turbulence with stronger economic fundamentals than during previous episodes of instability, offering some cushion against external shocks.

Home Loan Borrowers Get Continued Relief

Floating-rate home loan borrowers will see no change in their EMIs for now, extending the benefit of cumulative rate cuts totalling 125 basis points since 2025. Equity and bond markets are expected to remain broadly stable in the near term. However, experts caution that rising crude oil prices and a weakening rupee could stoke imported inflation, potentially forcing the RBI’s hand later in FY27. Economists anticipate the central bank may revise its inflation forecast upward toward 5% in coming months.

The RBI’s data-driven approach signals vigilance without alarm — balancing India’s relatively benign inflation environment against a volatile global backdrop. Markets will closely watch upcoming inflation and growth data for cues on the next policy direction.