Economists See RBI Holding Fire On Rates At June Policy Review

Most economists are betting on status quo from the Reserve Bank of India next week. In a Reuters poll, 44 of 56 economists expect the RBI to keep the repo rate unchanged at 5.25% on June 5, signalling that the bar for the first rate cut remains high. With inflation still hovering uncomfortably close to the upper end of the target band and growth not flashing any immediate distress signals, the consensus is that the Monetary Policy Committee will prefer to wait a bit longer.

For markets, that effectively means the current “higher for longer” interest rate setting could stretch further into the year, even as global central banks slowly drift toward easing. Bond traders and banks will now be more focused on the policy tone than the rate action itself.  

Policy Expectations And Macro Backdrop  

The poll’s tilt toward no change reflects a balancing act: headline inflation has eased from its worst levels but remains patchy across food and core, while GDP and high frequency indicators suggest the economy is holding up reasonably well. Cutting too early risks stoking price pressures again, especially with food and fuel still vulnerable to shocks.  

What Markets Will Listen For  

Since the repo call looks largely priced in, attention will shift to the RBI’s commentary on future moves. Any hint that the central bank is edging closer to a neutral or easing bias, or tweaking its inflation projections, will be pored over by traders trying to time the first cut. Conversely, a hawkish line about lingering risks could push back rate cut expectations and keep yields sticky.  

Impact For Borrowers And Lenders  

For borrowers, an unchanged repo rate means EMIs are unlikely to see near term relief, keeping retail and corporate borrowing costs anchored at current levels. For banks and NBFCs, a prolonged pause gives more stability on funding costs but also limits the ability to spur fresh credit demand through cheaper loans, putting the onus back on growth and competition rather than monetary tailwinds.  

Key Highlights  

• Reuters poll shows 44 of 56 economists expect RBI to hold repo rate at 5.25% on June 5  
• Pause call reflects lingering inflation concerns despite resilient growth  
• Market focus shifts to policy guidance and timing of first rate cut  
• Unchanged repo rate keeps EMIs and lending rates broadly steady for now  

Sources: Reuters economists’ poll on RBI June 5 policy expectations