With the Reserve Bank of India’s Monetary Policy Committee (MPC) set to announce its latest policy decision on June 5, most experts believe the central bank is likely to hit the pause button once again.
The widely expected outcome is that the and maintain its neutral policy stance. While borrowers may have hoped for another rate cut, economists say the central bank is likely to wait and watch before making its next move.
So, why is the expected to stay on hold? Here are three key reasons.
The RBI Wants More Time to Assess Inflation Risks
Inflation may be under control for now, but several risks are emerging on the horizon. Rising crude oil prices, a weaker rupee and geopolitical tensions have increased uncertainty around future price pressures.
According to Adhil Shetty, CEO of Bankbazaar, the RBI is expected to avoid any immediate action and instead monitor how these risks develop.
“The RBI is widely expected to keep the repo rate unchanged at 5.25% in the upcoming MPC meeting. While there is some discussion around the possibility of a less accommodative policy stance later in the year due to higher crude oil prices, a weaker rupee, and emerging inflation risks, the prevailing view is that the central bank will prefer to assess how these factors evolve before taking any rate action,” he said.
Shetty added that the RBI’s updated inflation and growth forecasts may be more important than the rate decision itself.
Policy Stability Supports Growth and Investment
Experts also believe the RBI will avoid sudden policy changes to maintain confidence across the economy.
Aman Sharma, Managing Director and Founder of Aarize Group, said , investors and consumers make long-term financial decisions with greater confidence.
“We anticipate the RBI is likely to keep the repo rate unchanged as stability is important for sustaining economic momentum and long-term investment confidence,” Sharma said.
He said that sectors such as real estate have shown resilience in recent years, supported by strong demand from homebuyers and investors.
According to Sharma, keeping rates unchanged would help maintain buyer confidence and support ongoing demand in the property market.
Global and Domestic Conditions Remain Uncertain
The RBI is also dealing with a more complicated economic environment than it was a few months ago.
Sachin Sawrikar, Managing Partner at Artha Bharat Investment Managers IFSC LLP, said wholesale inflation is moving higher, the rupee has weakened and concerns over the monsoon continue to remain in focus.
“The RBI MPC is widely expected to hold the repo rate on June 5. But markets would be mistaken to treat this as a non-event. The real story is what the committee says, not what it does,” he said.
Sawrikar added that a neutral stance today should not be interpreted as a signal that rates will remain unchanged indefinitely.
“If West Asia does not stabilise and energy prices remain elevated, a rate hike in H2 FY27 can no longer be dismissed as a tail risk; it is a scenario markets may not be fully pricing in,” he said.
According to him, investors will closely watch the RBI’s guidance for clues about the future direction of interest rates.
If the RBI keeps the repo rate unchanged, there will be no immediate impact on home loan, car loan or personal loan EMIs.
However, experts advise households to remain financially prepared. Shetty said borrowers should continue maintaining adequate emergency savings and avoid taking on excessive debt, especially when inflation and interest-rate uncertainties remain elevated.
Meanwhile, while the repo rate decision may be straightforward, the RBI’s commentary on inflation, growth, crude oil prices and global risks could have a bigger impact on markets.
For now, the consensus view is clear: the RBI is likely to keep the repo rate unchanged at 5.25%. The bigger question is what Governor Sanjay Malhotra and the MPC signal about the months ahead.