Overview
- The Monetary Policy Committee kept the policy repo rate at 5.25% and held a neutral stance on Friday, June 5, signalling a data‑dependent pause rather than an immediate tightening of policy.
- The RBI and the finance ministry announced coordinated steps to lure foreign capital, including removal of capital gains and interest withholding taxes for some foreign investors in government bonds and expanded foreign access to new 15-, 30- and 40‑year G‑secs under the Fully Accessible Route.
- To speed dollar inflows the central bank offered concessional forex swaps for certain PSU external borrowings and agreed to cover banks’ hedging costs on fresh 3‑ and 5‑year FCNR(B) deposits through September 30, 2026, all of which are explicitly time‑bound.
- Markets reacted with immediate stabilisation as the rupee strengthened and bond yields eased while analysts put potential inflows from the package in a wide range roughly between $40 billion and $75 billion depending on index inclusion and investor take‑up.
- The RBI raised its FY27 inflation forecast to 5.1% and cut growth to 6.6%, warning that sustained higher oil prices or a weak monsoon could broaden inflation and force policy rate hikes of an estimated 25–75 basis points if price pressures become persistent.