Reserve Bank of India holds repo rate at 5.25% in unanimous June 5 vote, lifts FY27 inflation forecast to 5.1%

On June 5, 2026, the Reserve Bank of India's six-member Monetary Policy Committee voted unanimously to keep the benchmark repo rate unchanged at 5.25% and retained its 'Neutral' stance, Governor Sanjay Malhotra announced. The hold reflects a hawkish-tilt reassessment: the RBI raised its CPI inflation projection for FY27 to 5.1% from 4.6% previously, while core inflation was pegged at 4.7% for the current fiscal.

At the same time it trimmed its GDP growth forecast for FY26-27 to 6.6% from 6.9%, signalling a more cautious growth-inflation trade-off amid what Malhotra called 'heightened global uncertainties' — a backdrop dominated across emerging markets by the Middle East/Iran conflict and oil-price risk that has also driven hawkish moves elsewhere (South Africa, Poland). Malhotra said the central bank remains 'confident to withstand shocks with minimum pain' and stressed the MPC would stay data-dependent and monitor supply-side pressures.

The decision keeps Indian policy in a holding pattern after earlier easing, with the upgraded inflation path effectively closing the door on near-term cuts. For sovereign and rates investors, the unanimous hold plus higher inflation forecast supports the rupee and signals the RBI is prioritizing inflation anchoring over growth support into FY27, even as it lowers its own growth outlook.