RBI Maintains Repo Rate At 5.25% Amid Inflationary Concerns

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has concluded its June 2026 meeting with a unanimous decision to keep the repo rate unchanged at 5.25%. Consequently, the Standing Deposit Facility (SDF) remains at 5.00%, while the Marginal Standing Facility (MSF) and Bank Rate are held at 5.50%. The MPC has opted to maintain a neutral policy stance, signaling a cautious approach to future adjustments.

The central bank has revised its GDP growth forecast for FY27 downward to 6.6%, down from the previous 6.9% projection. This adjustment is attributed to external risks, including global trade uncertainties and energy market volatility. More critically, inflation projections have been raised, with CPI inflation for 2026-27 now expected at 5.1%, and Q3 FY27 inflation projected to reach 5.9%. The RBI cited geopolitical tensions, shipping disruptions, and imported inflation as primary drivers for this upward revision.

To bolster the economy, the RBI has introduced a special measure to bear the full hedging cost on fresh 3-5 year Foreign Currency Non-Resident (Bank) deposits mobilized by banks until September 30, 2026. This initiative is designed to encourage foreign currency inflows and stabilize the external sector. The central bank's focus remains on balancing growth support with the necessity of containing inflationary pressures in a volatile global environment.