RBI's Monetary Policy Committee Set to Announce Repo Rate Decision

Monetary Policy Meeting Commences

New Delhi, June 4: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) convened on Wednesday to deliberate on potential adjustments to the repo rate. Economists and industry analysts anticipate a third reduction of 25 basis points, bringing the rate down to 5.75 percent.

Under the leadership of RBI Governor Sanjay Malhotra, the committee's decision is expected to be revealed on June 6. Previously, the RBI had lowered the repo rate by 50 basis points in its last two policy reviews, resulting in a current rate of 6 percent.

Market observers are keenly monitoring developments for indications of a possible third rate cut, as there is growing anticipation for additional monetary support to stimulate domestic growth amidst deteriorating global economic conditions.

The RBI's shift towards a more accommodative stance is largely influenced by two key macroeconomic factors: stable inflation rates and indications of a cyclical slowdown.

Current headline CPI inflation remains consistently below the RBI's medium-term target of 4 percent, while GDP growth appears to be weakening due to external factors, including trade disruptions stemming from recent U.S. policy changes.

Multiple rating agencies and international organizations have revised India's GDP growth forecasts for FY26 downward. While the RBI retained its growth estimate at 6.5 percent in April, other projections have been adjusted to a range of 6.0 percent to 6.3 percent.

According to Bajaj Broking Research, “The MPC has clearly transitioned from a neutral to an accommodative position, signaling the RBI's intention to inject liquidity and bolster growth. This shift is supported by April's CPI inflation dropping to 3.2 percent, the lowest level since July 2019, and remaining comfortably within the RBI's target range.”

With inflation expectations stabilized, growth momentum slowing, and ongoing external vulnerabilities, the conditions appear increasingly favorable for another rate cut.

While the ultimate decision will hinge on evolving global circumstances, particularly from developed economies, market consensus is leaning towards the likelihood of a third rate cut to sustain India's growth trajectory, as noted in the report.

A recent report from SBI has even suggested a significant 50-basis point rate cut in the upcoming RBI MPC policy.

Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI, stated, “Concerns regarding domestic liquidity and financial stability have diminished. Inflation is anticipated to remain within the acceptable range. Maintaining domestic growth momentum should be the primary policy focus, justifying a substantial rate cut.”

With liquidity remaining in surplus, liabilities are being repriced more rapidly in the current rate-easing cycle. Banks have already lowered interest rates on savings accounts to a minimum of 2.70 percent.

Additionally, fixed deposit (FD) rates have been cut by 30-70 basis points since February 2025. The SBI report indicates that the transmission to deposit rates is expected to be robust in the upcoming quarters.