The Reserve Bank of India kept the repo rate unchanged at 5.25% [1] during its June 2026 Monetary Policy Committee meeting.

The decision reflects the central bank's attempt to balance economic growth with mounting external pressures. By holding the rate steady for a second consecutive meeting [2], the RBI is signaling a cautious approach toward price stability while navigating global volatility.

Governor Sanjay Malhotra announced the policy outcome at 10 a.m. on Friday [3], followed by a press conference at 12 p.m. [3] at the Reserve Bank of India headquarters. Malhotra said the bank will maintain a neutral policy stance to remain flexible in the face of shifting economic data.

Despite the steady interest rate, the RBI raised its inflation outlook for the 2027 fiscal year to 5.1% [4]. This upward revision comes as the Indian economy faces a weakening rupee and rising bond yields. The central bank identified these factors as primary drivers of the updated forecast.

External geopolitical tensions are also weighing on the domestic economy. Malhotra said inflationary pressures from the Iran war are contributing to the current economic climate. These global disruptions have complicated the bank's efforts to maintain long-term price stability, a key mandate of the Monetary Policy Committee.

The decision to hold the repo rate at 5.25% [1] suggests that the RBI is not yet ready to pivot toward easing or tightening. The bank is instead monitoring how the weakening currency and international conflict impact the cost of imported goods and overall domestic pricing.

“The Reserve Bank of India kept the repo rate unchanged at 5.25%”

The RBI's decision to maintain a neutral stance while raising inflation projections indicates a 'wait-and-see' approach. By keeping the repo rate steady despite the pressures of the Iran war and a sliding rupee, the bank is avoiding a premature policy shift that could either stifle growth or fail to curb rising prices. The increase in the FY27 outlook suggests that the central bank expects persistent cost-push inflation, which may limit the room for interest rate cuts in the near future.