Overview
- The RBI’s Monetary Policy Committee, which met through Wednesday, kept the repo rate—the rate at which it lends to banks—at 5.25% with a neutral stance in a unanimous vote.
- The central bank cut its FY27 growth forecast to 6.9%, projected average inflation at 4.6%, and issued its first core-inflation estimate at 4.4% for the year.
- Policymakers cited the Iran conflict for higher oil costs, supply snags, and rupee pressure, warning that a supply shock could morph into weaker demand if disruptions persist.
- To steady the currency, the RBI capped banks’ daily foreign‑exchange positions and restricted some offshore derivatives, and the rupee firmed to about 92.56 per dollar after a two‑week ceasefire was announced.
- The RBI pledged active liquidity support to banks and signaled a wait‑and‑watch approach into the June 3–5 review, with energy flows through the Strait of Hormuz and shipping costs likely to shape the next moves.