RBI MPC Meeting 2026: Why the central bank is likely to keep the repo rate unchanged at 5.25%;3 things to know

With the Reserve Bank of India’s Monetary Policy Committee (MPC) set to announce its latest policy decision on June 5, most economists expect the central bank to keep the repo rate unchanged at 5.25 per cent while maintaining its neutral policy stance.

While borrowers may have been hoping for another rate cut, experts believe the RBI is likely to adopt a wait-and-watch approach amid growing uncertainty around inflation and global economic conditions.

Here are the three key reasons why the central bank is expected to stay on hold.

1. RBI wants to assess emerging inflation risks

Although retail inflation has remained largely under control, several factors could push prices higher in the coming months. Rising crude oil prices, a weakening rupee and ongoing geopolitical tensions have increased uncertainty around the inflation outlook.

According to Adhil Shetty, CEO of BankBazaar, the RBI is unlikely to rush into any policy action and would prefer to monitor how these risks evolve.

“The RBI is widely expected to keep the repo rate unchanged at 5.25 per cent 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.

Shetty added that the RBI’s revised inflation and growth projections could prove more significant than the rate decision itself.

2. Policy stability supports growth and investment

Experts also believe the RBI will avoid abrupt policy changes to preserve economic stability and investor confidence.

Aman Sharma, Managing Director and Founder of Aarize Group, said stable interest rates help businesses, investors and consumers make long-term financial decisions with greater certainty.

“We anticipate the RBI is likely to keep the repo rate unchanged as stability is important for sustaining economic momentum and long-term investment confidence,” Sharma said.

He noted that sectors such as real estate have remained resilient, supported by strong demand from homebuyers and investors. Keeping rates unchanged, he added, would help sustain buyer confidence and support continued growth in the property market.

3. Global and domestic uncertainties remain elevated

The RBI is also navigating a more complex economic environment than it was a few months ago.

Sachin Sawrikar, Managing Partner at Artha Bharat Investment Managers IFSC LLP, pointed out that wholesale inflation is edging higher, the rupee has weakened and concerns over the monsoon remain in focus.

“The RBI MPC is widely expected to hold the repo rate on June 5. But markets would be mistaken to treat this as a non-event. The real story is what the committee says, not what it does,” he said.

Sawrikar cautioned that a neutral stance should not be interpreted as a guarantee that rates will remain unchanged for an extended period.

“If West Asia does not stabilise and energy prices remain elevated, a rate hike in H2 FY27 can no longer be dismissed as a tail risk; it is a scenario markets may not be fully pricing in,” he added.

What does it mean for borrowers?

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

However, experts advise households to remain financially prepared. Shetty said borrowers should maintain adequate emergency savings and avoid taking on excessive debt, especially at a time when inflation and interest-rate uncertainties remain elevated.

While the rate decision itself may be straightforward, market participants will closely watch the RBI’s commentary on inflation, growth, crude oil prices and global risks for clues about the future path of interest rates.

For now, the consensus view remains clear: the RBI is likely to keep the repo rate unchanged at 5.25 per cent. The bigger question is what Governor Sanjay Malhotra and the MPC signal about the months ahead.