RBI MPC June 2026: Sanjay Malhotra-Led Panel Keeps Repo Rate Unchanged At 5.25%

RBI MPC Repo Rate Meeting: The MPC also decided to retain its 'Neutral' policy stance, signalling a balanced approach as it seeks to manage inflation risks while supporting economic growth.

RBI MPC Repo Rate Meeting June 5 2026: With the latest decision, the SDF rate remains at 5 per cent, while the MSF rate and the bank rate continue at 5.5 per cent.

Source : ABPLIVE AI

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Key points generated by AI, verified by newsroom

• RBI MPC kept repo rate unchanged at 5.25 percent.
• Global uncertainty, rising crude, West Asia conflict influenced policy.
• Rising inflation risks, growth moderation noted amid uncertain outlook.

The Reserve Bank of India's Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, on Friday kept the benchmark repo rate unchanged at 5.25 per cent, opting for policy continuity amid elevated global uncertainty, rising crude oil prices and evolving inflation dynamics.

The decision was taken unanimously by the six-member committee after its three-day meeting held between June 3 and June 5.

The MPC also retained its 'Neutral' policy stance, signalling that policymakers remain focused on balancing inflation risks with the need to support economic growth as the global environment becomes increasingly uncertain.

With the latest decision, the Standing Deposit Facility (SDF) rate remains at 5 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.5 per cent.

Global Backdrop Has Deteriorated Since April

Explaining the rationale behind the decision, Governor Malhotra said the global economic outlook has weakened since the MPC's previous meeting, largely due to the continuing geopolitical impasse in West Asia.

The RBI noted that sharply higher energy prices and disruptions to global supply chains are weighing on economic activity across countries, forcing central banks to adopt a more cautious approach.

According to the central bank, several major advanced economy central banks may now have to lean towards tighter monetary policy as inflation concerns resurface.

The RBI also pointed to growing volatility in global financial markets, with investors increasingly seeking safe-haven assets amid uncertainty. This has put pressure on several emerging market currencies, even as global equity markets continue to be supported by optimism surrounding artificial intelligence-led growth.

Why The MPC Chose To Hold Rates

The central bank said the conflict in West Asia and the resulting surge in energy prices have significantly altered the macroeconomic outlook since the April policy review.

"The adverse implications of the extended disruption in supply chains and elevated energy prices are reflected in the moderation of growth and increase in inflation projections from the April policy," the RBI noted.

While inflation risks have increased, the MPC concluded that it would be prudent to wait for greater clarity on the duration and intensity of the conflict before taking further policy action.

The committee reiterated that it will remain data-dependent and continue to closely monitor incoming economic indicators.

Inflation Remains Below Target, But Risks Are Rising

The RBI noted that retail inflation has so far remained below its target despite the global energy shock, as the pass-through to domestic prices has been limited.

However, policymakers warned that headline inflation is expected to firm up in the coming quarters and could move closer to the upper tolerance band during the third quarter of FY27.

The central bank also flagged the possibility of second-round effects, where higher input costs begin feeding into inflation expectations, wages and broader price levels across the economy.

While underlying inflation pressures remain relatively benign at present, the MPC said continued vigilance remains necessary.

Monsoon And El Niño Add To Inflation Concerns

Apart from global risks, the RBI also highlighted domestic weather-related uncertainties.

The outlook remains clouded by forecasts of a sub-normal south-west monsoon and the possibility of El Niño conditions, both of which could affect agricultural production and food prices.

The central bank warned that food inflation remains vulnerable to weather disruptions, adding another layer of uncertainty to the inflation outlook.

At the same time, the RBI noted that government initiatives such as crop diversification, water conservation measures, climate-resilient farming practices and the promotion of short-duration crops could help mitigate some of these risks.

India's Growth Showing Early Signs Of Moderation

On the growth front, the MPC observed that domestic economic activity remains broadly resilient despite external headwinds.

Manufacturing and services sector activity continue to expand, while domestic demand has remained supportive.

However, the RBI also pointed to early signs of moderation in certain segments of the economy, as reflected in some high-frequency indicators.

According to the central bank, elevated energy prices and persistent supply constraints are beginning to exert pressure on economic activity and could weigh on growth if the conflict drags on.

RBI Flags Risks To Both Inflation And Growth

The MPC acknowledged that uncertainty surrounding the duration of the West Asia conflict, the extent of supply-chain disruptions and the pace of normalisation remain key risks to its baseline forecasts.

Higher energy prices have already started feeding through to retail products, while import diversification efforts may help ease supply shortages but are likely to come at a higher cost.

Given these uncertainties, the RBI said there are now "considerable risks" to both its inflation and growth assessments.

For now, policymakers have opted to stay on hold, keeping rates unchanged while awaiting greater clarity on global developments and their impact on the Indian economy.