New Delhi, May 31 (IANS) The Reserve Bank of India (RBI) is widely expected to keep its benchmark policy rate unchanged at 5.25 per cent when the Monetary Policy Committee (MPC) concludes its three-day meeting on June 5, as policymakers weigh mounting global uncertainties and their potential impact on inflation and economic growth.
Market participants and economists anticipate that the central bank will maintain its cautious stance, choosing to closely monitor evolving developments in West Asia and their implications for commodity prices, supply chains and financial markets before taking any policy action.
The six-member MPC, chaired by RBI Governor Sanjay Malhotra, will meet from June 3 to June 5 to review the monetary policy framework. The committee had also left rates unchanged at its previous meeting in April, citing uncertainties arising from geopolitical tensions and their possible effects on inflation and growth prospects.
While a status quo on interest rates is seen as the most likely outcome, some economists believe the central bank may revise its macroeconomic projections. Rising crude oil prices, persistent supply chain disruptions and pressure on the rupee due to external factors could prompt the RBI to raise its inflation forecast while trimming its GDP growth estimates for the current financial year.
A recent report by the State Bank of India’s economic research department expects the central bank to maintain the existing policy rate amid a volatile global backdrop.
According to the report, inflation trends suggest that consumer price inflation could remain above 5 per cent for the next three quarters, even though inflation during the current quarter is expected to remain in the range of 4 to 4.1 per cent.
The report projects India’s real GDP growth at around 7.2 per cent in the fourth quarter of FY26 and estimates overall economic growth for FY26 at 7.5 per cent. However, it cautioned that prolonged geopolitical uncertainties could alter the outlook and necessitate revisions to growth forecasts as fresh data becomes available.
For FY27, the SBI research team currently estimates GDP growth at 6.6 per cent, though it acknowledged that the forecast remains subject to change depending on developments in the global economic and geopolitical environment.
The report argued that the RBI should continue to adopt a data-driven approach while keeping rates unchanged for now. It noted that if inflationary pressures intensify, the central bank has alternative policy tools at its disposal, including measures such as Operation Twist, which can help manage market conditions without altering benchmark interest rates.
–IANS
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