RBI Likely To Keep Interest Rates Unchanged In June Policy Review, SBI Projects FY27 GDP Growth At 6.6%
· Free Press Journal
New Delhi: The Reserve Bank of India (RBI) is likely to keep interest rates unchanged at its upcoming Monetary Policy Committee (MPC) meeting, according to a report by SBI Research.
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The report suggests that the central bank may prefer to closely monitor incoming economic data before taking any further action on rates. Instead of changing the repo rate, the RBI could use short-term liquidity tools and market operations to manage pressure on the rupee and financial markets.
Growth Outlook Remains Positive
SBI Research has projected India's Gross Domestic Product (GDP) growth at 6.6 percent for FY27.
RBI Maintains Status Quo On Policy Rate At 5.25%, GDP May Grow By 6.9% In FY27However, the report cautioned that the growth forecast could be revised as more economic data becomes available, especially given continuing geopolitical uncertainties around the world.
The report also estimates that India's economy likely grew by around 7.2 per cent in the fourth quarter of FY26, while overall GDP growth for FY26 is expected to be around 7.5 percent.
Inflation May Stay Elevated
According to the report, inflation is expected to remain above 5 percent during the next three quarters, although current inflation is estimated to be around 4.0-4.1 percent.
For FY27, consumer price inflation (CPI) is projected at around 5 percent, which remains within the RBI's target range but carries upside risks.
RBI May Hold Rates Steady Amid Global Uncertainty, War Impact, Rising Rupee Pressure and Oil Above $100 Shape Policy ViewHigher food prices, global uncertainties and rising energy costs could continue to influence inflation trends in the coming months.
Concern Over Rupee Depreciation
Despite strong economic fundamentals, the Indian rupee has weakened more than several other global currencies, the report noted.
SBI Research believes the RBI may need to step up its intervention in the foreign exchange market to control excessive volatility and prevent a sharp one-way decline in the currency.
RBI MPC Keeps Repo Rate At 5.25%, 5 Key Takeaways-FY26 Inflation Seen At 2.1% & GDP Growth Upgraded To 7.4%The report highlighted that India's foreign exchange reserves remain strong and are sufficient to manage market fluctuations if required.
West Asia Tensions and Oil Prices
The report warned that continuing tensions in West Asia could keep global crude oil prices elevated.
It said crude oil may trade above USD 90 per barrel for a significant part of 2026 if geopolitical risks remain high and peace efforts fail to produce lasting results.
RBI Retains FY26 Inflation Forecast At 2.1%, Projects Rise To 4.2% By Q2 FY27 - MPC Keeps Repo Rate Unchanged At 5.25% With Neutral StanceFuel Prices Could Face Pressure
According to SBI Research, if global crude prices remain elevated, the government may have to reduce excise duties on petrol and diesel by around Rs 5 per litre to fully offset losses faced by oil marketing companies.
Otherwise, domestic fuel prices may need to be increased by around Rs 6 per litre from current levels to compensate for rising costs.
Overall, the report indicates that while India's growth outlook remains healthy, inflation, oil prices, currency movements and geopolitical developments will continue to shape the economic landscape in the months ahead.