- May 31, 2026
RBI MPC Meeting To Begin On June 3: Rate Hike Or Status Quo? What Markets Are Pricing In
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RBI MPC Meeting June 2026: RBI Governor Sanjay Malhotra is scheduled to announce the policy decision on June 5, the final day of the MPC meeting.
RBI MPC Meeting June 2026.
RBI MPC Meeting June 2026: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will begin its three-day meeting on June 3 to review the country’s monetary policy amid growing concerns over inflationary pressures arising from higher crude oil prices and geopolitical tensions in West Asia.
RBI Governor Sanjay Malhotra is scheduled to announce the policy decision on June 5, the final day of the meeting.
Market participants remain divided over the central bank’s next move. While the majority expect the RBI to maintain status quo on interest rates, a section of economists believes the central bank could spring a surprise with an out-of-turn rate hike, the first such increase in nearly three years.
According to a Moneycontrol poll, 10 out of 14 respondents expect the MPC to leave the repo rate unchanged at 5.25 per cent in the June policy review. However, four participants see a possibility of a rate hike.
There is also a broad expectation among economists that the RBI may eventually raise rates by up to 50 basis points during FY27 if inflationary pressures intensify due to supply chain disruptions linked to the ongoing US-Iran conflict.
The RBI had begun its monetary easing cycle in February 2025 and cumulatively reduced the benchmark repo rate by 125 basis points to 5.25 per cent. Since then, the central bank has maintained a pause, keeping rates unchanged in both February and April 2026 policy reviews.
Majority See RBI Extending Pause
Despite concerns over rising fuel prices and uncertainty surrounding the monsoon, most economists expect the RBI to continue with its wait-and-watch approach.
“We don’t think that the MPC (monetary policy committee) will go in for a rate hike very soon. This is a supply shock. It is very different from the Covid shock, which was a simultaneous supply and demand shock,” Aditi Nayar, chief economist at ICRA, said.
Industry body Assocham has also urged the RBI to maintain status quo on policy rates. The industry chamber has recommended liquidity support measures, interest subvention and moratorium relief for export-oriented and energy-intensive MSMEs in the upcoming policy review.
Amid falling rupee, Soumya Kanti Ghosh, group chief economic advisor of State Bank of India, said, “In the current unprecedented situation, the RBI must take measures to defend the Rupee especially in a situation like this when domestic macro fundamentals are strong. So, should there be repo rate hike? NO! The RBI must use short-term rates and nudging to manage the pressure on the rupee.”
Inflation Risks Remain In Focus
India’s retail inflation rose from 3.2 per cent in February 2026 to 3.5 per cent in April 2026. While the increase remains modest, economists are closely monitoring the impact of elevated energy prices and currency movements on future inflation trends.
According to Assocham, India’s inflation trajectory remains relatively favourable compared to the US, where inflation accelerated from 2.4 per cent in February to 3.8 per cent in April.
Some Economists See Case For A Rate Hike
A minority of economists argue that the sharp depreciation in the rupee and the risk of imported inflation may warrant a tighter monetary stance.
“While the MPC has reiterated that its repo rate decisions are driven more by domestic growth and inflation dynamics than by the need to defend the currency, the sharper-than-expected pace of INR depreciation raises the risk of second-order effects on CPI and, in our view, strengthens the case for a hike,” economists from Standard Chartered said, according to Moneycontrol.
The June policy decision will be closely watched by markets for the RBI’s assessment of inflation risks, growth outlook and the potential impact of geopolitical developments on the Indian economy.
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