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Informist, Friday, Jun. 5, 2026

 

MUMBAI – V.R.C. Reddy, head of treasury, Karur Vysya Bank Ltd., said the following on the Reserve Bank of India's second bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Friday:

 

RBI has kept the repo rate unchanged at 5.25% and retained the neutral stance, reflecting a cautious and data dependent approach amid heightened global uncertainties. MPC has revised its inflation forecast upward by 50 bps to 5.1% and lowered the growth forecast by 30 bps, factoring in the potential impact of the West Asia crisis, elevated crude oil and energy prices, global supply chain disruptions and weather related risks such as a weak monsoon and El Nino on food inflation. While domestic demand continues to remain resilient, the RBI has chosen to await greater clarity on the evolving inflation growth dynamics before taking any further policy action.

 

The policy carries a mildly hawkish undertone. With inflation projected at 5.1% against a repo rate of 5.25%, the scope for maintaining the current rate setting over an extended period appears increasingly constrained unless inflation shows a clear and sustained moderation. The RBI's communication underscores its continued vigilance on inflation risks, particularly from crude oil and food prices, while keeping future policy options open should price pressures intensify. Simultaneously, the central bank has assured comfortable liquidity conditions through government spending, RBI dividend transfers, moderation in currency leakage and enhanced FX swap operations, which should support durable liquidity and provide some relief to deposit mobilisation pressures faced by banks.

 

RBI has also announced a series of measures aimed at attracting foreign exchange inflows and strengthening external sector resilience. These initiatives are positive for the rupee, the Balance of Payments and overall market confidence. Overall, the policy reflects a cautious, wait and watch approach with a balanced focus on inflation management and growth support. Bond yields are expected to remain range-bound in the 6.90-7.10?nd in the near term, while the rupee is likely to draw support from the announced FX measures and improving liquidity conditions.  End

 

Compiled by Meera Nair
Filed by Akul Nishant Akhoury

 

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