MPC Meeting Highlights: RBI Guv Sanjay Malhotra says economy in good condition; expects ‘healthy flows from various policy measures’

The June 2026 RBI MPC meeting comes amid geopolitical tensions, surging crude oil prices, and a weakening rupee.
Brent crude oil is currently hovering around $95.42 per barrel.
The Indian rupee rose 8 paise to 95.66 against the US dollar in early trade today.
Due to surging crude oil prices, Indian OMCs have also hiked petrol and diesel prices four times in May.

A weaker monsoon linked to El Nino conditions is also expected to increase the risk of food inflation.

Read more: RBI MPC to hit pause? War abroad, El Nino at home point to a cautious stance

Bank Julius Baer economists believe that the RBI may stay on hold this time. “While most economists expect the RBI to stay on hold at its June 3-5 meeting, the market will be looking out for hawkish signals to assess rate hike prospects,” Bank Julius Baer economists stated.

They believe inflationary pressures are increasing as state-run fuel retailers raised petrol and diesel prices four times in May.

GDP growth is expected at 6.9%, down from 7.6% a year ago.

“These projections face downside risks as the Middle East conflict drags on,” Bank Julius Baer said.

Read more: RBI rate decision: Economists say rupee pain, fuel spikes key worries amid West Asia crisis

Repo rate: Unchanged at 5.25%
Stance: ‘Neutral’

Standing Deposit Facility (SDF): 5% (Unchanged)

Marginal Standing Facility (MSF) & Bank Rate: 5.5% (Unchanged)

Inflation projections

FY27: 4.6%

Q1 FY27: 4%

Q2FY27: 4.4%

GDP projections
FY27: 6.9%

Q1 FY27: 6.8% Vs 6.9% earlier

Q2FY27: 6.7% Vs 7.0% earlier

The RBI, in its first meeting of FY27, decided to keep the repo rate unchanged at 5.25% and retained its “neutral” stance. At that time, the Iran-US conflict had just intensified in late February. The central bank had assumed an average crude oil price of $85 per barrel for FY27 and $75 per barrel for the following year.

This is the second RBI MPC meeting of FY27. The RBI is scheduled to meet six times, every two months, in FY27. The first RBI MPC meeting was held on April 6, 7 & 8. After this, the next MPC meeting will be held on August 3, 4, and 5.

Here is the full schedule released by the RBI.

According to IDFC First Bank, “The June policy will take place against the backdrop of inflation and growth concerns. The

West Asia crisis seems no closer to a resolution, and global crude oil prices remain elevated.”

Accosding to them, “A rate hike at this juncture isn’t warranted, as inflation remains within the target band (2% to 6%). Moreover, in the coming quarters, the impact on domestic growth is expected to

become more visible as higher energy prices affect both corporate margins and consumer demand.”

They pointed out that “The overall tone of the policy is expected to remain cautious, with the RBI reiterating its willingness to act if there is a generalization of price pressures.”

“We expect the MPC to hold rates steady this week, while signalling readiness to respond should inflation risks intensify, and second-round pressures begin to emerge,” said Emkay Global.

While the percolation of the energy shock to the real sector is still unfolding, the RBI is likely to flag a cloudy Brent outlook amid a large drawdown in energy inventories and lingering geopolitical risks. This, in conjunction with the rising risk of El Niño, could lead the RBI to raise its FY27 inflation forecast, while adding downside risks to growth.

Importantly, given the recent INR weakness, the RBI is likely to reiterate the clear delineation between monetary and FX policy under the inflation-targeting regime.

“We believe it’s a close call, but the repo rate may be left unchanged at 5.25%, since CPI inflation remains below target so far, financial conditions are tightening anyway, and the RBI may not want to give the impression that it is using rate hikes for FX defence,” said Pranjul Bhandari, Chief India Economist and Strategist, ASEAN Economist at HSBC.

If it makes its oil price scenario of $95 a barrel in FY27 as its base case, its inflation forecast will rise from 4.6% to 5%, adding a hawkish touch to the policy without rate action. Eventually, if El Niño sets in, we think inflation could cross 6% for two to three quarters starting in September.

“We forecast two rate hikes starting in Q4FY26. We also forecast a below-consensus GDP growth of 6% in FY27, which may tie the RBI’s hands from tightening more,” she added.

Greetings! The Reserve Bank of India (RBI) will announce the Monetary Policy Committee (MPC) decision on policy rates at 10:00 am today. Stay tuned to this space at financialexpress.com for detailed coverage, key expectations, and market reactions to the RBI’s decision.