The RBI MPC meeting in June 2026 decided to keep the repo rate exactly where it was. 5.25 per cent. Governor Sanjay Malhotra put it out there on Friday, June 5th, saying it was just market expectations. Unanimous. The policy stance? Neutral. Nothing dramatic, just sticking to the line.
But there was more happening behind the scenes, you know. The whole thing felt tightly managed.
They kept the standing deposit facility, the SDF, pegged at five per cent. That’s the bottom of the interest rate corridor. And the marginal standing facility, the MSF, and the bank rates? Those stayed at 5.50 per cent. A steady, almost boring status quo on the interest rate corridor.
It’s worth remembering the journey there. They had already moved the repo rate down by 125 basis points since February 2025, landing them right at that 5.25 per cent mark. A slow, steady reduction, maybe.
Then you shift to the economy itself. The growth forecasts got tweaked. The RBI slashed the GDP growth projection for the current financial year, 2026-27, down to 6.6 per cent. Earlier estimates were running higher, closer to 6.9 per cent. A slight dip, maybe a sign of caution.
They broke it down quarterly. Q1 was 6.6 per cent. Q2, 6.3 per cent. Q3, 6.5 per cent. And Q4, 6.8 per cent. Those numbers shift around, you see. They were already projecting these figures.
It’s interesting how this compares to what they had projected back in April. Back then, they were looking at Q1 growth at 6.8 per cent, Q2 at 6.7 per cent, Q3 at 7 per cent, and Q4 at 7.2 per cent for that same financial year. A noticeable difference, a shift in the outlook, even if the overall direction felt familiar.
Inflation figures also took a hit. Malhotra projected the CPI inflation for the 2026-27 year at 5.1 per cent. That was a change from the previous policy where they had pegged it at 4.6 per cent. Inflation seems to be ticking up, steadily.
The quarterly inflation projections followed a similar pattern. Q1, 4.2 per cent. Q2, 5.1 per cent. Q3, 5.9 per cent. And Q4, 5.4 per cent. It’s rising, that inflation. Steady climb through the year.
But the real pressure point, the stuff that got the most attention, was the foreign currency situation. The RBI actually laid out five specific moves to try and pump capital inflows back into India. This was directly tied to the stress on forex reserves caused by the ongoing Iran-US conflict. It was a real concern floating around.
Malhotra spoke about these measures following the meeting. It wasn't just abstract economics; it was about managing the flow of money when global tensions are high.
First, they expanded the Foreign Accrual Rate, or FAR. That meant bringing in all the new 15-, 30-, and 40-year G-Sec issuances. Trying to open up the door for foreign investors a bit wider.
Then there were investment concentration limits on FPIs under the general route. They removed those restrictions. Less friction, hopefully.
Another move focused on residents abroad. They extended the investment limits for NRIs and OCI holders in listed equities, even without the usual SEBI registration hassles. This facility got extended to all resident individuals living overseas. A concession, maybe.
Then there was something about the swap window. They extended the concessional forex swap window specifically for PSU ECBs until September 30, 2026. A specific relief for those institutions.
And then there was the banking side. Full hedging-cost support for banks raising 3-5 year FCNR(B) deposits got extended until September 30th as well. That’s trying to ease the cost of attracting those long-term foreign deposits.
Finally, they adjusted the export side. The export proceeds realization period got restored. It went back to nine months, up from fifteen months. A quicker turnaround on those earnings.
It’s a lot of moving pieces all at once. The rate stayed put. The growth forecast dipped a little. Inflation is creeping up. And all this while, they were scrambling to manage the forex pressure, trying to pull in capital using these specific, somewhat messy, adjustments. It felt less like a clean policy and more like damage control under real-time geopolitical strain.
Written by Gree News Team — Senior Editorial Board
Gree News Team covers international news and global affairs at Gree News. Our collective of senior editors is dedicated to providing independent, accurate, and responsible journalism for a global audience.
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