Why did India's rate panel decide to keep the policy repo rate unchanged at 5.25% in its June 5 meeting?

The rate panel unanimously chose to hold the policy repo rate at 5.25% and maintain a 'neutral' monetary policy stance because headline inflation remained within the 2–6% tolerance band (at just under 4% in May) and core inflation was contained, indicating 'subdued underlying inflation pressures'; as stated by RBI Governor Sanjay Malhotra, the committee adopted a 'wait and watch' approach to assess whether recent spikes in oil and food prices would lead to broader inflation, rather than acting pre-emptively.

What is the RBI's updated inflation forecast for FY2026–27, and what key assumption underpins it?

The RBI raised its retail inflation forecast for the financial year ending March 2027 to an average of 5.1% (up from 4.6%), with core inflation revised up to 4.7% (from 4.4%), assuming an average crude oil price of $95 per barrel; this forecast remains within the central bank’s 2–6% tolerance band around its 4% medium-term target.

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India Rate Panel Downplays Case for Pre-emptive Rate Move in Meeting Minutes

Jun 19, 2026

The Reserve Bank of India maintained interest rates at 5.25%, citing subdued inflation despite rising oil prices. The central bank assumed an average crude oil price of $95 per barrel for the fiscal year ending March 2027.

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