RBI Governor Sanjay Malhotra Keeps Repo Rate Steady at 5.25% Amid Inflation Concerns

The Monetary Policy Committee (MPC) on 5 June 2026 decided to keep the repo rate at 5.25%. The central bank has kept its balance between growth and inflation. There are more global uncertainties and domestic problems than stability, and the RBI has made no change in policy.

The committee voted unanimously to maintain the current stance with the Standing Deposit Facility (SDF) fixed at 5.00% and the Marginal Standing Facility (MSF) and Bank Rate at 5.50% respectively. Given changing risks and fluctuations in the crude oil market and currency rate, the RBI kept a neutral stance and left room to adjust to them.

As inflation pressures mount, the RBI raised its inflation forecast to 5.1% for FY27, up from 4.6% previously, citing the threat that energy prices could rise, supply chains could go down, and the monsoon might be weak. At the same time, the central bank cut India’s GDP growth forecast to 6.6% from 6.9%, a sign of concern over the economy being able to withstand external and domestic pressure.

The RBI’s outlook was influenced by global factors. The West Asia conflict has disrupted supply chains and driven crude oil prices up, and the Indian rupee dropped more than 7% in May 2026 to a record low of 96.96 against the US dollar. These developments have increased inflationary risks, so the RBI needs to hold rates steady and not risk destabilising financial markets.

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What is more, even with these challenges, India’s domestic economy is strong. Manufacturing and services sectors are performing very well and providing a buffer for the external shocks. But increasing input costs and currency pressures are still there. The RBI’s neutral stance shows that if inflation picks up, it is prepared to act, but for now, stability is more important for borrowers and businesses.

The market welcomed the announcement. Sensex rose 294 points to 74,654, and Nifty 50 gained 77 points to 23,494, reflecting investor confidence in RBI’s balanced approach. In maintaining the repo rate at 5.25%, the RBI has signalled its commitment to safeguarding growth while keeping inflation under control, a delicate balancing act in uncertain times.