RBI MPC Today: What's Expected Amid Rupee Fall, West Asia Crisis & Fuel Price Hike?

RBI MPC Meet: Ahead of the crucial RBI MPC meeting, which is slated to begin on Wednesday, amid rising inflation fears, economists, and analysts are largely expecting India's top bank to keep interest rates unchanged this week.

The six-member Monetary policy Committee (MPC) led by RBI Governor Sanjay Malhotra, will meet from June 3 to June 5, with the policy decision slated to be announced on Friday.

Notably, 11 respondents expect the RBI to maintain the repo rate at current levels in the June policy review, while four foresee a 25-basis-point increase, according to a PTI poll.

The RBI has already reduced the benchmark repo rate by 125 basis points since last year to aid economic growth. Meanwhile, economists expect policymakers may choose to assess the impact of rising fuel prices and geopolitical developments ahead of taking the next big policy move.

While several economists expect a pause this week, the larger consensus points to higher interest rates later in FY27 as inflationary pressures builds.

Meanwhile, many respondents also expect at least two rate hikes during the ongoing fiscal year, while some see room for additional tightening if commodity prices and imported inflation continue to elevate.

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However, the tone largely will be cautious, leaning towards being hawkish.

A top economist at Bank of Baroda, noted that their expectations are inclined towards an increase in RBI's inflation forecast towards 5% and lower for GDP to nearly 6.5% from 6.9%.

Further, he said there are no specific moves expected on foreign exchange, however, detailed breakdown on developments are expected.