Millions of loan borrowers and fixed deposit (FD) investors across the country will be closely watching the outcome of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting, which begins tomorrow, i.e. on June 3, 2026. The meeting holds significance as it comes amid ongoing tensions in West Asia, rising oil and gas prices and supply chain challenges. This has led to uncertainty in the stock market and left crude oil and gold prices highly volatile. Amid this, the question on everyone's mind is - will the central bank make any changes to interest rates this time? RBI Governor Sanjay Malhotra will announce the meeting's decisions on Friday, May 5.
RBI may cut GDP growth forecast
According to a recent research report from the State Bank of India (SBI), the RBI will not deal any blows to loan borrowers in this meeting.
However, some experts believe that rising oil and gas prices, a depreciating rupee, and supply chain disruptions could lead the RBI to raise its inflation forecast and cut its gross domestic product (GDP) growth forecast. In April, the RBI kept the repo rate steady, adopting a "wait and watch" approach to assess the impact of the West Asia conflict on energy supplies, inflation, and economic growth.
More hawkish tone
Abhishek Bisen, Head Fixed Income, Kotak Mahindra AMC, is of the view that the RBI is likely to hold the repo rate at 5.25 per cent but adopt a more hawkish tone-raising inflation forecasts.
“The RBI’s June 2026 MPC meeting comes amid heightened uncertainty due to global conflicts, rising crude prices, sharp rupee depreciation, and monsoon risks. While CPI inflation remains benign at 3.48%, surging WPI and fuel costs signal emerging pressures. Growth remains strong but is facing headwinds, with the FY27 outlook softening. Bond yields and risk premia have risen, reflecting market caution. Against this backdrop, while markets are pricing in potential rate hikes ahead, the RBI is likely to hold the repo rate at 5.25 per cent for now, but adopt a more hawkish tone-raising inflation forecasts, slightly trimming growth projections, and relying on forex tools to manage currency volatility,” Bisen said.
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