Repo rate, inflation, GDP forecasts — What to expect from RBI MPC today

The Reserve Bank of India's Monetary Policy Committee (MPC) is widely expected to keep the repo rate unchanged at 5.25% when it announces its policy decision on June 5. While the rate outcome appears largely priced in by markets, investors, borrowers and businesses will closely track the central bank's commentary on inflation, growth, crude oil prices and the rupee.

The June policy review comes at a time when policymakers are balancing emerging inflation risks against the need to support economic growth amid an uncertain global environment.

Status quo remains the base case

Most economists expect the RBI to leave key policy rates unchanged for a second consecutive meeting. In April, the MPC unanimously voted to maintain the repo rate at 5.25% while retaining its neutral stance. The Standing Deposit Facility (SDF) rate was kept at 5%, while the Marginal Standing Facility (MSF) rate remained at 5.5%.

With inflation pressures resurfacing and global uncertainties rising, analysts believe the central bank will prefer to wait for more clarity before altering its policy trajectory.

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According to Adhil Shetty, CEO of Bankbazaar, the RBI is likely to focus on monitoring risks rather than taking immediate action.

"The RBI is widely expected to keep the repo rate unchanged at 5.25% in the upcoming MPC meeting. While there is some discussion around the possibility of a less accommodative policy stance later in the year due to higher crude oil prices, a weaker rupee, and emerging inflation risks, the prevailing view is that the central bank will prefer to assess how these factors evolve before taking any rate action," he said.

Inflation risks cloud the outlook

The RBI's inflation outlook is expected to be a key focus area.

Global crude oil and gas prices have risen amid prolonged geopolitical tensions in West Asia. At the same time, supply-chain disruptions and a weaker rupee have added to concerns about imported inflation.

Several economists expect the central bank to revise its inflation projections higher.

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Madan Sabnavis, Chief Economist at Bank of Baroda, believes the RBI will maintain rates but adopt a more cautious tone.

"We do not expect any change in repo rate or stance this time. However, the tone will be cautious, leaning towards being hawkish. We can expect RBI to increase its inflation forecast towards 5% and lower that for GDP to around 6.5% from 6.9%," he said.

Similarly, Hitesh Suvarna, Economist at JM Financial, expects the RBI to raise its FY27 inflation estimate by 20 basis points to 4.8% while trimming its growth forecast to 6.8%.

Markets await signals

Apart from rates, investors will closely watch the RBI's assessment of economic growth and currency stability.

A hawkish pause could support the rupee and help anchor inflation expectations, while limiting volatility in the bond market. Equity markets may remain relatively stable if the central bank avoids any major policy surprises.

Most bond market participants expect limited movement in yields, although shorter-duration bonds could outperform longer-term securities if inflation concerns persist.

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What does it mean for borrowers?

If the RBI leaves the repo rate unchanged, there will be no immediate impact on home loan, vehicle loan or personal loan EMIs.

However, experts advise borrowers to remain cautious given ongoing uncertainties surrounding inflation, crude oil prices and global economic conditions. Maintaining adequate emergency savings and avoiding excessive leverage remain prudent strategies.

While the consensus strongly favours a pause, some analysts see a small possibility of a 25-basis-point rate hike if inflation risks intensify. Such a move could strengthen the rupee but may weigh on equities, particularly rate-sensitive sectors such as banking, real estate and consumer discretionary.

For now, the central question is not whether the RBI will pause, but what Governor Sanjay Malhotra and the MPC signal about the path of interest rates in the months ahead.

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