RBI Maintains Neutral Stance Amid Rising Inflationary Pressures

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) concluded its June 2026 meeting by keeping the repo rate unchanged at 5.25%. This decision marks the third consecutive pause in the current cycle, following a cumulative 125 basis points of easing since February 2025. The MPC has maintained a neutral policy stance, signaling a cautious approach to balancing growth and price stability.

The central bank has revised its FY27 GDP growth forecast downward to 6.6% from 6.9%, citing external risks such as geopolitical tensions in West Asia and supply-chain disruptions. Simultaneously, the inflation forecast for FY27 was sharply increased to 5.1% from 4.6%. Core inflation projections were also raised to 4.7% from 4.4%, reflecting concerns over imported inflation and commodity-price shocks. The RBI specifically highlighted the 42.2% national rainfall deficit as of June 21, 2026, as a significant risk factor.

Despite the RBI's cautious outlook, Goldman Sachs has upgraded India's macroeconomic outlook for calendar year 2026. Following the recent US-Iran peace deal, the firm raised its real GDP growth forecast to 6.8% and lowered its headline inflation forecast to 4.4%. These revisions are driven by lower crude oil prices and resilient domestic activity. The contrast between the RBI's conservative domestic assessment and the optimistic global investment bank outlook underscores the uncertainty surrounding India's economic trajectory for the remainder of the fiscal year.