The Reserve Bank of India’s Monetary Policy Committee on Friday, 5 June, unanimously decided to keep the policy repo rate unchanged at 5.25%, citing heightened global uncertainty, elevated energy prices, supply chain disruptions and risks to inflation and growth.
The standing deposit facility rate remains at 5.00%, while the marginal standing facility rate and the Bank Rate remain at 5.50%. The MPC also decided to continue with the neutral stance.
RBI Governor said the Indian economy entered the current phase of global turbulence with stronger fundamentals than in previous similar episodes.
However, he noted that the global economic outlook remains clouded by the continuing geopolitical impasse in West Asia, higher energy prices, market volatility and disruptions to key trade routes and supply chains.
The MPC said CPI inflation remains below the target at present, but risks have increased due to higher energy prices, supply disruptions, a sub-normal south-west monsoon forecast and El Niño risks.
Headline CPI inflation was recorded at 3.4% in March and 3.5% in April 2026, while core inflation remained stable at 3.7%.
For 2026-27, the RBI projected CPI inflation at 5.1%, with Q1 at 4.2%, Q2 at 5.1%, Q3 at 5.9% and Q4 at 5.4%. Core inflation has been projected at 4.7% for the year.
On growth, the RBI said domestic economic activity has remained largely steady despite global shocks.
India’s real GDP growth for 2025-26 was placed at 7.6%, supported by private consumption, fixed investment, manufacturing and services.
However, the central bank flagged that higher energy and input prices, supply disruptions and weather-related risks could weigh on economic activity. Real GDP growth for 2026-27 has been projected at 6.6%, with Q1 at 6.6%, Q2 at 6.3%, Q3 at 6.5% and Q4 at 6.8%.
The RBI also announced a set of measures to attract foreign capital and strengthen the balance of payments. Under the Fully Accessible Route, the central bank will expand the list of specified government securities by including all new issuances of 15-year, 30-year and 40-year G-Secs.
It will also remove limits related to short-term investment, concentration and individual securities for FPI investment under the General Route.
The RBI said investment limits for NRIs and OCIs in equity instruments traded on the stock market without SEBI registration will be increased.
The same facility will also be extended to all individual Persons Resident Outside India at par with NRIs and OCIs.
A concessional forex swap facility will be provided till 30 September 2026 to incentivise external commercial borrowings by PSUs. A similar facility for bearing full hedging costs will be provided till 30 September 2026 to authorised dealer banks for raising fresh 3-5 year FCNR(B) deposits.
The RBI has also proposed restoring the time period for realisation of export proceeds to nine months.
On the external sector, the RBI said India’s foreign exchange reserves stood at $682.3 billion as of 29 May 2026, providing about 11 months of import cover. Net FPI outflows stood at $13.7 billion during 2026-27 so far, till 2 June, mainly from the equity segment.
The Governor said the exchange rate policy remains unchanged, with the rupee determined by market forces.
However, the RBI will curb excessive volatility and prevent disorderly market movements when required.
Concluding the statement, the RBI said the domestic economy remains relatively strong despite the adverse impact of global conditions on the growth-inflation outlook.
The central bank said it would continue to make policy adjustments to meet emerging challenges and strengthen macroeconomic fundamentals.
