The Reserve Bank of India’s Monetary Policy Committee kept the policy repo rate steady at 5.25 % and maintained its neutral stance, judging that headline inflation, though set to rise on energy pass-through and a sub-par monsoon, remains below target while domestic demand is only starting to show modest signs of softening amid the protracted West Asia conflict. Following cumulative cuts of 75 bp between April and December 2025, the repo rate has been unchanged in the three meetings of 2026. The standing deposit facility and marginal standing facility were left at 5.00 % and 5.50 %, respectively; no new liquidity measures were announced. CPI inflation, 3.5 % in April, is now projected at 5.1 % for 2026-27 (core 4.7 %), approaching the upper tolerance band in Q3 before easing, while real GDP growth is forecast at 6.6 % (down from 6.9 % in April) on continued private consumption and public-led investment despite costlier energy and deficient rains. Capacity utilisation and bank-plus-non-bank credit flows remain supportive of investment, but elevated freight costs and volatile commodity prices weigh on merchandise exports. Globally, firmer oil prices, tightening bias among major central banks and a stronger USD compound the risks. The MPC reiterated it will stay data-dependent and “remain vigilant” to second-round inflation effects and evolving supply-side pressures.
Reserve Bank of India2026-06-05
Reserve Bank of India Keeps Policy Repo Rate Unchanged at 5.25%
India’s Monetary Policy Committee kept the repo rate unchanged at 5.25 percent (standing deposit facility 5.00 percent, marginal standing facility 5.50 percent) and held a neutral stance with no new liquidity measures. It projects 2026-27 CPI inflation at 5.1 percent and cuts the real GDP growth forecast to 6.6 percent, pledging data-dependent vigilance amid energy and monsoon-linked price risks.