RBI MPC June meeting: In its policy meeting, which took place between June 3-5, the committee continued with the ‘neutral’ stance
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday kept the repo rate unchanged at 5.25 per cent. RBI Governor Sanjay Malhotra announced the decision after the policy meeting.
At its policy meeting, held between June 3 and 5, the committee maintained its ‘neutral’ stance. The standing deposit facility (SDF) rate was kept at 5 per cent. The marginal standing facility (MSF) rate and the bank rate were both set at 5.5 per cent.
On the global economic environment, Malhotra said uncertainty persists due to the ongoing conflict in West Asia. “Over the past few months, the global economy has been shaped by heightened uncertainty, disruptions to key trade routes and supply chains, increased market volatility and cautious business sentiment,” he said.
The RBI Governor further noted that India is better positioned to deal with the current global challenges compared to previous episodes of external shocks. He expressed confidence in the economy’s ability to absorb these pressures with limited impact.
RBI MPC: Growth outlook
The RBI Governor said that the real GDP growth for FY27 is projected at 6.6 per cent.
He said elevated energy prices and disruptions in global supply chains are weighing on economic activity and growth prospects. “There are incipient signs of moderation in some sectors, as suggested by high frequency indicators. MPC was of opinion that there are considerable risks to the baseline assumption of growth and inflation. Food outlook remains uncertain on account of subnormal southwest monsoon forecasts and El Nino,” the RBI Governor said.
The quarterly growth projections are as follows:
- Q1 FY27: 6.6 per cent
- Q2 FY27: 6.3 per cent
- Q3 FY27: 6.5 per cent
- Q4 FY27: 6.8 per cent
RBI MPC: Inflation forecast
The central bank projected CPI inflation for FY27 at 5.1 per cent.
The quarterly inflation forecasts are:
- Q1 FY27: 4.2 per cent
- Q2 FY27: 5.1 per cent
- Q3 FY27: 5.9 per cent
- Q4 FY27: 5.4 per cent
RBI Governor Sanjay Malhotra said, “Major advanced economy central banks are likely to pivot towards monetary policy tightening. While equity markets remain buoyant, driven by AI-fuelled optimism, global bond markets remain bearish amidst renewed inflation fears and continuing debt sustainability concerns.”
“Risk of sentiments and safe haven demand are imparting volatility to forex markets with a depreciating trend in many EME currencies.”
Source: Business Standard
