The Reserve Bank of India (RBI) is anticipated to keep its benchmark policy rate steady at 5.25 per cent following the Monetary Policy Committee’s meeting on June 5. Market experts and economists predict that the RBI will uphold a cautious approach, closely monitoring global developments in West Asia for potential impacts on inflation and economic growth. The six-member MPC, led by RBI Governor Sanjay Malhotra, will convene from June 3 to June 5 to assess the monetary policy framework.
Some analysts suggest that while interest rates are likely to remain unchanged, the RBI might adjust its macroeconomic forecasts. Factors such as escalating crude oil prices, ongoing supply chain disruptions, and external pressures on the rupee could lead to a higher inflation outlook and a downward revision in GDP growth projections for the current fiscal year. A recent report from the State Bank of India’s economic research division foresees the RBI maintaining the current policy rate amidst global volatility.
The report highlights that consumer price inflation could persist above 5 per cent for the next three quarters, with the current quarter’s inflation expected to range between 4 to 4.1 per cent. Projections indicate India’s real GDP growth at approximately 7.2 per cent in the fourth quarter of FY26, with an overall economic growth estimate of 7.5 per cent for the fiscal year. However, uncertainties stemming from geopolitical factors could necessitate adjustments to growth forecasts as new data emerges.
Looking ahead to FY27, the SBI research team projects GDP growth at 6.6 per cent, subject to changes based on global economic and geopolitical developments. The report emphasizes a data-driven approach for the RBI, suggesting that maintaining current rates is prudent. It also mentions that in case of heightened inflationary pressures, the central bank has tools like Operation Twist to manage market conditions without altering benchmark interest rates.
