Overview
- The Monetary Policy Committee, which met June 3–5, voted unanimously to keep the policy repo rate at 5.25% and retain a neutral stance to preserve policy flexibility.
- Minutes published June 19–20 warned that headline inflation has been driven by supply shocks in food and fuel while core inflation remains contained, and the RBI downgraded growth to 6.6% for FY27 with inflation projected at 5.1%.
- Several MPC members flagged the risk that rising wholesale (WPI) prices could pass through to consumer (CPI) inflation and urged close monitoring for second‑round wage or price effects.
- After the meeting a US‑Iran accord and a reopening of the Strait of Hormuz helped Brent crude fall about 16%, prompting market research to say the near‑term odds of a rate hike have fallen and giving the MPC more time to assess data.
- The policy pause lowers immediate borrowing costs for households and firms, supports growth in the short term, and means markets will watch monsoon rains, oil moves, and WPI→CPI transmission for signals the RBI must act.