RBI Repo Rate Holds at 5.25%: What the new inflation and growth forecast reveals?

By Samira Vishwas On Jun 5, 2026

New Delhi: The Reserve Bank of India (RBI) on Friday announced its monetary policy decision after the June 2026 Monetary Policy Committee (MPC) meeting, keeping the repo rate unchanged at 5.25% and maintaining a neutral stance.

Repo Rate Unchanged for Third Consecutive Meeting

RBI Governor Sanjay Malhotra said the decision was unanimous, marking the third straight policy review where the repo rate has been held steady at 5.25%. The central bank continues to maintain a cautious approach as it balances inflation risks with growth concerns.

The RBI has already reduced the repo rate by 125 basis points between February and December 2025. However, since December 2025, the policy rate has remained unchanged across three consecutive meetings.

GDP Growth Forecast Cut to 6.6%

The central bank revised its GDP growth projection for FY27 downwards to 6.6%compared to the earlier estimate of 6.9%. The downgrade reflects rising global uncertainty, including geopolitical tensions and volatility in energy markets, which are impacting economic sentiment and investment flows.

Inflation Outlook Raised to 5.1%

At the same time, the RBI increased its Consumer Price Index (CPI) inflation forecast to 5.1% from 4.6%. The upward revision is driven by higher costs across key commodities, including energy, metals, plastics, and rubber, which are feeding into broader price pressures.

Officials said external factors, especially crude oil price fluctuations, are playing a significant role in shaping India’s inflation trajectory.

Measures to Support Capital Inflows

To strengthen foreign inflows and stabilize the rupee, the RBI announced five new measures aimed at improving dollar liquidity in the system. These steps come alongside a government decision to exempt foreign portfolio investors from capital gains tax on government securities.

Following these announcements, the rupee strengthened, recovering 54 paise to 95.24 against the US dollar after touching an intraday. low of 95.78.

Policy Response Amid Global Uncertainty

The MPC meeting comes against the backdrop of ongoing geopolitical tensions linked to the Iran-US conflictwhich has added pressure on oil prices and currency markets. The RBI said it will continue to closely monitor global developments while maintaining stability in inflation and growth.