RBI Bulletin - June 2026

At its 61st meeting (3-5 June 2026), the Monetary Policy Committee voted unanimously to keep the policy repo rate unchanged and to retain the neutral stance. With risks to both inflation and growth having risen, the committee judged it prudent to wait for greater clarity rather than act. The next meeting is scheduled for 3-5 August 2026.

• The global environment has deteriorated since April; the West Asia conflict lingers amidst a fragile truce, with adverse spillovers via supply chains and energy prices.
• Headline inflation is projected to firm towards the upper tolerance level in Q3 FY27, but the supply shock is expected to wane from Q4; underlying pressures remain benign.
• Second-round effects on expectations and wages are a distinct possibility, warranting a close vigil before any policy action.
• Domestic demand is resilient and manufacturing and services keep expanding, though high-frequency indicators show incipient moderation in some sectors.
• With risks amplified but the outlook uncertain, the MPC chose to remain data-dependent and monitor whether supply pressures embed into the general price level.

Provisional Estimates place FY26 real GDP growth at 7.7% (up from 7.1% in FY25), with Q4 at 7.8%, driven by strong private consumption and double-digit fixed investment, and led by industry and services on the supply side. For FY27, the MPC projects growth at 6.6%, with a gentle profile through the year. Prolonged supply-chain disruption, financial-market volatility and weather remain the downside risks.

Headline CPI stayed below the 4% target in early 2026 as the pass-through to domestic prices was limited, but it edged up to 3.9% in May on a broad-based rise across food, fuel and core. With crude near $110/bbl, a WPI spike to 9.7% and retail fuel-price hikes from May, CPI is projected to climb towards the upper tolerance band by Q3 FY27 before easing. Core inflation stays contained, so the risk is supply-side, not demand-side.

India's external position navigated elevated tariff and trade uncertainty in FY26. Record gross FDI and rising net FDI underscore continued global interest, reserves cover about 11 months of imports, and both the current-account deficit (0.6% of GDP) and the central fiscal deficit (4.4%) are contained. Temporary FPI equity outflows and rupee pressure are being watched, but had begun to reverse by mid-June. The Governor announced five new measures to attract foreign capital.

• 1Wider FAR universe. All new 15-, 30- and 40-year G-Secs added as "specified securities" under the Fully Accessible Route; short-term, concentration and individual-security limits for FPIs under the General Route removed. FPIs are also exempted from LTCG and withholding tax on G-Sec interest.
• 2Higher NRI / OCI equity limits. Investment limits for NRIs and OCIs in stock-market equity (without SEBI registration) raised, and the facility extended to all individual Persons Resident Outside India at par.
• 3Concessional forex swap for PSU ECBs. A concessional foreign-exchange swap facility offered till 30 September 2026 to incentivise external commercial borrowings by public-sector undertakings.
• 4Hedging support on FCNR(B). RBI to bear the full hedging cost till 30 September 2026 for AD banks raising fresh 3-5 year FCNR(B) deposits.
• 5Export realisation window restored. The time to realise export proceeds restored to nine months, easing exporter cash flows.

System-level parameters for banks and NBFCs remain healthy on capital, liquidity and asset quality, with only a modest easing in profitability. Credit growth is broad-based and outpacing deposits. This strength is the theme of the Bulletin's featured speech, which argues that resilience is not automatic but must be deliberately designed before it is tested.

Translating the policy into practical implications for the people who act on it: MSMEs, larger businesses and households. The common thread is a supportive demand and rate environment paired with rising cost discipline.