New Delhi: The Reserve Bank of India’s Monetary Policy Committee (MPC) has decided to keep the policy repo rate (RBI MPC Repo Rate) unchanged at 5.25 per cent, maintaining its neutral policy stance amid rising global uncertainties, elevated energy prices, supply chain disruptions, and concerns over inflation and economic growth.
The decision was taken during the 61st meeting of the Monetary Policy Committee held from June 3 to 5, 2026, under the chairmanship of RBI Governor Sanjay Malhotra.
The meeting was attended by MPC members Dr. Nagesh Kumar, Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta, and Indranil Bhattacharyya.
The committee unanimously voted to keep the policy repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 5.25 per cent.
Consequently, the Standing Deposit Facility (SDF) rate remains at 5.00 per cent, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.50 per cent. The MPC also retained its neutral stance.
RBI MPC Repo Rate Unchanged Amid Rising Global Risks
Explaining the rationale behind the decision, the MPC noted that the global environment has deteriorated since its previous policy review.
The prolonged conflict in West Asia, rising energy prices, global supply chain disruptions, and increased volatility in financial markets have heightened risks to both inflation and economic growth.
According to the committee, crude oil reserves are declining and commodity prices have firmed up globally.
Several advanced economy central banks are expected to adopt a more cautious monetary policy approach, while sovereign bond yields have risen amid concerns over fiscal sustainability and inflation.
Despite these challenges, domestic economic activity has remained broadly stable. High-frequency indicators suggest that private consumption has remained resilient, fixed investments have continued to gain momentum, and services exports have remained robust.
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RBI MPC Repo Rate Unchanged: GDP Growth Forecast Maintained at 6.6%
The RBI projected real GDP growth for 2026-27 at 6.6 per cent.
Quarter-wise projections are:
- Q1 FY27: 6.6%
- Q2 FY27: 6.3%
- Q3 FY27: 6.5%
- Q4 FY27: 6.8%
The central bank highlighted that elevated energy prices, supply-side disruptions, weak global demand, and weather-related uncertainties remain downside risks to growth.
The MPC also observed that a potentially deficient south-west monsoon could impact agricultural activity and rural demand. However, government initiatives focused on crop diversification, water conservation, climate-resilient farming practices, and short-duration crops are expected to help mitigate these risks.
Supportive factors such as strong capacity utilisation, sustained credit flows, government capital expenditure, GST rationalisation, and stable employment conditions are expected to support economic activity going forward.
RBI MPC Repo Rate Unchanged: Inflation Projected at 5.1% for FY27
Headline CPI inflation increased to 3.4 per cent in March and 3.5 per cent in April 2026, primarily due to higher food inflation.
Core inflation remained unchanged at 3.7 per cent between January and April. However, the MPC highlighted emerging inflationary pressures due to recent increases in fuel prices.
Since May 2026, retail fuel prices have increased cumulatively by 7.4 per cent for petrol and 8.4 per cent for diesel.
The RBI estimates that this could directly add approximately 36 basis points to headline inflation, with additional second-round effects likely to emerge in the coming months.
Higher global energy prices have also increased costs across sectors, including commercial LPG, industrial raw materials, chemicals, rubber, and plastic products.
Taking these developments into account, the RBI projected CPI inflation for 2026-27 at 5.1 per cent.
Quarter-wise inflation projections are:
- Q1 FY27: 4.2%
- Q2 FY27: 5.1%
- Q3 FY27: 5.9%
- Q4 FY27: 5.4%
The MPC stated that while underlying inflation pressures remain relatively benign, risks from supply-side shocks, monsoon uncertainty, and El Niño conditions warrant close monitoring.
RBI MPC Repo Rate Unchanged: RBI Chooses Caution Despite Inflation Risks
The MPC acknowledged that inflation risks have increased due to global developments. However, the committee felt it would be prudent to wait for greater clarity regarding the duration of the conflict, the extent of supply chain disruptions, and the magnitude of inflationary spillovers.
The committee stated that CPI inflation remains below the target despite the global shock because the pass-through to domestic prices has remained limited so far. However, second-round effects on inflation expectations and wages remain a possibility.
Given the uncertainties surrounding inflation and growth, the MPC decided that maintaining the policy rate while retaining a neutral stance would be the most appropriate course of action. The committee reiterated that future policy actions would remain data-dependent.
The minutes of the MPC meeting will be published on June 19, 2026. The next MPC meeting is scheduled from August 3 to 5, 2026.
Jitendra Tanwar, Managing Director & CEO, Namdev Finvest Limited, said, “For businesses operating in Tier 2, Tier 3, and rural markets, policy stability provides the confidence needed to plan investments, expand operations, and pursue growth opportunities in an uncertain economic environment. MSMEs continue to navigate rising input costs, persistent inflationary pressures, seasonal business fluctuations, and working capital constraints, making predictable access to credit more critical than ever.
The RBI’s data-driven and measured approach offers much-needed certainty to businesses focused on sustaining growth and building resilience. A stable interest rate environment also supports efficient funding and favorable hedging costs on our DFI borrowings, enabling us to pass on the benefits of competitively priced capital to the entrepreneurs and small businesses we serve.”
Real Estate Sector Welcomes RBI MPC Repo Rate Unchanged Decision
The decision to keep the repo rate unchanged has been viewed positively by the residential real estate sector, which continues to navigate rising construction costs and geopolitical uncertainties.
According to industry analysis, the RBI MPC Repo Rate Unchanged decision provides stability for homebuyers and developers at a time when the broader macroeconomic environment remains under pressure from global developments.
The ongoing conflict in the Middle East has resulted in higher global oil prices and increased domestic construction costs, creating supply-side inflationary pressures for developers.
Geopolitical uncertainty has also led some investors from the Middle East to temporarily pause investment decisions in Indian housing markets.
Against this backdrop, stable borrowing costs have helped prevent additional pressure on housing demand.
According to ANAROCK Research, residential sales declined by 7 per cent quarter-on-quarter, with approximately 1,01,675 units sold in Q1 2026 compared to 1,08,970 units in Q4 2025. The total value of housing sales declined by 5 per cent quarter-on-quarter to ₹1.51 lakh crore.
However, annual demand remained strong. Residential sales volume increased by 9 per cent year-on-year, while sales value grew by 6 per cent compared to Q1 2025, when approximately 93,280 units worth ₹1.42 lakh crore were sold.
Housing Supply Continues to Rise
New project launches have begun outpacing sales velocity, reversing trends observed after the pandemic.
Total new housing supply increased by 2 per cent sequentially and 26 per cent year-on-year, with over 1,26,265 units launched during Q1 2026.
As a result, unsold housing inventory increased by 4 per cent quarter-on-quarter and 7 per cent year-on-year, crossing 6.01 lakh units by the end of the quarter.
Industry observers believe that maintaining a stable financing environment is critical for absorbing the growing inventory pipeline.
The RBI MPC Repo Rate Unchanged decision is therefore expected to serve as a stabilising factor for the housing market.
Stable home loan rates can support buyer sentiment, while efforts by the central bank to stabilise the Indian rupee may help reduce pressure on imported fixtures and fittings, particularly in the luxury housing segment, which accounts for around 20 per cent of total housing supply as of Q1 2026.
Overall, the rate pause is expected to help the sector manage rising inventory levels, navigate cost pressures, and sustain growth momentum through 2026.
