RBI Policy June 2026: MPC keeps repo rate unchanged at 5.25%; stance remains ‘Neutral’

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 5.25%, largely in line with market expectations.

The six-member MPC started its three-day deliberations on Wednesday, June 3.

RBI Governor Sanjay Malhotra, in his address on Friday, June 5, 2026, said that the decision to maintain the status quo on the key policy rate was unanimous among the members.

Repo rate is the rate at which the Reserve Bank of India (RBI) lends short-term money to commercial banks.

Further, the RBI has decided to continue with the 'Neutral' stance.

With the repo rate unchanged at 5.25% and the stance kept ‘neutral’, it means the RBI is not signalling any immediate move towards either easing or tightening policy, and will continue to monitor inflation and growth before taking further action.

What the RBI Governor said on the global and Indian economy

RBI Governor Sanjay Malhotra, in his address, said that the global economy remains clouded amid unprecedented challenges and, taking into account the current situation, the MPC unanimously decided in favour of status quo on the policy interest rate with a neutral stance.

“We remain confident to withstand shocks with minimum pain amid heightened global uncertainties,” the governor said.

CPI inflation remains below target with an upward bias, the RBI Governor added.

Further, the governor said that elevated energy prices are being reflected in moderate growth and a rise in inflation.

The MPC will remain data-dependent and closely monitor developments, including supply-side pressures, the RBI governor said.

India’s domestic economic activity largely remains steady, the RBI governor said, while noting that the rise in energy prices and supply disruptions are likely to weigh on economic activity and that the impact of cost pressures is visible.

Weak global demand and high logistics costs continue to pose headwinds for merchandise exports, the governor said.

Governor Sanjay Malhotra further said that the RBI has lowered its GDP growth projection to 6.6% from 6.9% earlier for the current fiscal (FY26-27).

CPI inflation projection upped

The Reserve Bank of India (RBI) has raised its CPI inflation projection for FY27 to 5.1%, up from the earlier estimate of 4.6%, RBI Governor Sanjay Malhotra said. Core inflation for the current fiscal is projected at 4.7%, he added.

The RBI will continue to ensure adequate liquidity in the banking system to meet the productive requirements of the economy, the governor said.

Higher energy prices and persistent trade policy uncertainties continue to pose upside risks to India’s current account deficit (CAD) this year, Malhotra noted.

Relief for FIIs

The RBI has also liberalised norms for foreign portfolio investors (FPIs) investing in government securities, and raised limits for investments by non-resident Indians (NRIs) and overseas citizens of India (OCIs) in equity instruments, Malhotra said.

Forex reserves

The RBI governor said that India’s foreign exchange reserves provide a sufficient buffer against external shocks and that the central bank remains vigilant and fully prepared to address any challenges arising from the West Asia conflict. Malhotra further clarified that the RBI’s exchange rate policy remains unchanged, and it does not target any specific level or band for the rupee.

What experts said on RBI Policy

Harshal Dasani, the business head at INVasset PMS, a SEBI-registered Portfolio Management Service (PMS) , said the RBI has kept the repo rate at 5.25% and held its neutral stance for a third meeting in a row, which is largely on expected lines.

"To my mind, the rate itself matters less than the tone, and the tone is cautious," the expert added.

With the rupee near record lows around 95.8 to the dollar and crude staying elevated due to the West Asia crisis, the case for any further rate cut has largely gone for now.

The RBI has already cut 125 basis points since February 2025, and "I think it would rather let those cuts feed through than add more stimulus into an inflation problem that is being driven from outside the country. The order of priorities looks clear to me: get inflation right, protect the currency, and worry about growth after that,” Dasani said.

Anyone hoping the cutting cycle restarts soon will be disappointed. From here, the next move, up or down, will depend on oil and the rupee far more than on domestic growth numbers, so the honest position for now is to wait for those to settle," Dasani added.

Sachin Sachdeva, Vice President, Sector Head - Financial Sector Ratings, ICRA Ltd, "RBI’s neutral stance and steady repo rate along with adequate liquidity in the system should help banks contain deposit costs, but the lack of yield upside is likely to delay margin recovery by a few months."