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Informist, Friday, Jun. 5, 2026

 

MUMBAI - Following are the highlights of Reserve Bank of India Governor Sanjay Malhotra's statement Friday after the second bi-monthly meeting of the Monetary Policy Committee for 2026-27 (Apr-Mar):

 

KEY TAKEAWAYS

* MPC left repo rate unchanged at 5.25%

* MPC voted 6-0 to leave repo rate unchanged at 5.25%

* MSF, Bank rates remain unchanged at 5.50%; SDF rate at 5.00%

* MPC decided to maintain 'neutral' policy stance

* Minutes of Jun MPC meeting to be released on Jun 19

 

EXTERNAL SECTOR

* Global crude oil prices averaged near $100/bbl in last 2 mos

* Crude prices FY27 may be substantially higher than Apr view

* Global econ shaped by disruptions to supply routes in past mos

* Global econ shaped by heightened uncertainty past few months

* Global econ outlook remains clouded

* Monetary policy has turned more cautious globally

* Major central bks likely to pivot to tighter monetary global

* Global econ deteriorated since last policy meeting

 

MACROECONOMY

* High energy prices pose upside risk to CAD FY27

* Mfg, svcs PMI show both sectors continue to be resilient

* Services exports holding up well

* Svcs trade surplus, remittances to provide comfort on CAD

* FDI inflows seen encouraging in April

* Higher gross, net FDI FY26 highlight foreign investor interest

* MPC noted adverse implications of high energy prices

* Noted elevated energy prices having adverse spillover on econ

* Noted considerable risk to inflation, growth assumptions

* Domestic demand remains resilient

* Confident in being able to withstand shocks with minimal pain

* Confident will withstand shocks with minimum pain

* Equity markets remain bouyant

* Mfg, svcs sector activity resilient

* Some sectors have slowed due to impact of West Asia war

* Will continue to be data dependent

* MPC to remain data dependent

* To track if higher price levels embedded in econ

* MPC to also monitor supply side pressures

* Domestic econ activity largely steady despite global shock

* Data shows domestic econ activity largely steady since war began

* Fixed invest retained momentum despite cost pressure

* Satisfactory reservoir levels of comfort to us

* Proactively undertook durable, transient liquidity steps

* Drawdown of govt cash, return of FX to aid banking liquidity

* Weighted avg call rate remained within LAF corridor

* Transmission in credit mkt has reduced

* Policy transmission in credit market moderated

* Transmission in credit market has moderated in Mar-Apr

* Econ at this point is relatively strong

* Econ relatively strong at this point

* To put in place policy to deal with challenges

* To put in place policy to improve macro stability

 

GROWTH

* Revises FY27 GDP growth forecast to 6.6% from 6.9?rlier

* Revises Apr-Jun GDP growth forecast to 6.6% from 6.8?rlier

* Revises Jul-Sept GDP growth forecast to 6.3% from 6.7?rlier

* Revises Oct-Dec GDP growth forecast to 6.5% from 7.0?rlier

* Revises Jan-Mar GDP growth forecast to 6.8% from 7.2?rlier

* Risks to growth forecasts are tilted to the downside

* GDP growth forecast cut, CPI forecast hiked since Apr

* Sustained demand for svcs export despite impact of AI

* Cost pressure becoming visible in econ activity

* Expect services exports to sustain momentum

* Import diversification to come at a higher cost

* High enery prices, supply disruptions to weigh on econ

* Pass-through of higher energy prices to retail pdts evident

* Deficient southwest monsoon to hit agri, rural demand

* Past agri steps to help mitigate impact of monsoon

* Govt capex to remain robust

* Govt capex expected to remain robust

* Cost escalation, high uncertainty to hit investor sentiment

* Headwinds for goods exports due to higher costs

* Govt steps should help cope with external shock

 

INFLATION

* Core inflation stable during Mar-Apr

* Revises FY27 CPI inflation forecast to 5.1% from 4.6?rlier

* Raised retail fuel prices to push CPI up in coming months

* Revises Apr-Jun CPI inflation forecast to 4.2% from 4.0%

* Revises Jul-Sept CPI inflation forecast to 5.1% from 4.4?rlier

* Revises FY27 core CPI inflation forecast to 4.7%

* Revises Oct-Dec CPI inflation forecast to 5.9% from 5.2?rlier

* Revises Jan-Mar CPI inflation forecast to 5.4% from 4.7?rlier

* Risks to inflation forecasts are on the upside

* Higher CPI may pull down discretionary household spending

* Rising inflation could be drag on households' purchasing power

* Core inflation much lower without precious metals Mar-Apr

* Higher energy prices led to sharp spike in WPI inflation

* Pass-through of higher global energy prices began in May

* CPI infation remains below target despite global shocks

* Impact of supply shocks to wane from Q4 onwards

* Underlying inflation pressure remain benign at this point

* Underlying inflation pressures remain benign as of now

* Second-round effects of inflation possible

* Inflation expected to inch towards upper level of band Q3 FY27

* Risk of higher inflation amplified

* MPC felt better to wait for better clarity on CPI to emerge

 

FINANCIAL SECTOR

* To maintain apt liquidity in banking system for econ needs

* System level fincl parameters healthy

* Banking system indicators healthy, profitability moderated

* FX reserves at $682.3 bln as on May 29

* FX reserves adequate, have import cover of 11 mos

* FX reserves adequate, cover 89% of external debt

* Have steps to attract foreign capital Fri

* Expanding universe of FAR bonds

* To add all new issuances of 15, 30, 40 yr gilts in FAR

* Removing concentration limits on FPI debt invest in general route

* NRI, OCI invest limits without SEBI registration being raised

* Concessional FX swap to be provided for 4 mos

* To incentivise external commercial borrow by PSUs

* To restore time for realising export proceeds to 9 mos from 15

* To give 3-5 yr FCNR B deposit window to banks till Sept 30

* FX exchange rate policy remains unchanged

* Want exchange rate to be determined by mkt forces

* To curb excessive volatility, prevent disordely move in FX

* Have range of regulatory, mkt instruments to deal with shock

* Will do whatever it takes to ensure orderly mkt conditions

* To do whatever it takes to ensure orderly mkt conditions

End

 

US$1 = INR 95.33

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Compiled by Vinod Bhovad

Edited by Akul Nishant Akhoury

 

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