Overview
- The Reserve Bank of India is widely expected to leave the policy repo rate at 5.25% when the Monetary Policy Committee meets from June 3–5 and to keep its decision data driven.
- State Bank of India research and many economists argue for holding rates and instead using short-term liquidity tools and currency-management steps to steady the rupee and markets.
- The finance ministry’s May review warned that the US–Iran conflict, higher global energy prices, a weakening rupee and a possible below-normal monsoon are raising upside risks to inflation.
- The RBI has been intervening in foreign-exchange markets to check volatility and India holds roughly $680 billion in reserves as a buffer, with some reports citing sizeable reserve drawdowns since February.
- Policymakers are expected to nudge up inflation forecasts toward about 5% and to trim FY27 growth to the mid-6% range while reserving the option to raise rates if second-round price effects take hold.