India: MPC in no mood to hike

Research evidence excerpt

India: MPC in no mood to hike

Global Markets Research

19 June 2026First Insights

Economics - Asia ex-Japan

Research Analysts

India: MPC in no mood to hike Asia Economics

Aurodeep Nandi - NFASL

… due to uncertainty of economic outlook, low core inflation and more aurodeep.nandi@nomura.com

widespread concerns on growth. +91 22 4037 4087

Sonal Varma - NSL

• The minutes of the RBI’s June MPC meeting suggest that members are getting more sonal.varma@nomura.com

concerned about downside risks to growth, while subdued underlying consumer +65 6433 6527

inflation remains an important buffer.

• There are three key reasons for heightened policy inertia – sensitivity of growth

momentum to premature tightening, absence of seriously entrenched inflationary

pressures and considerable uncertainty of outlook. The minutes validate our out-of-

consensus view that the RBI will remain on hold in August and for the rest of this year.

The MPC voted unanimously to leave the policy rate unchanged at 5.25% with a “neutral”

policy stance at the Junepolicymeeting, in addition to announcing a flurry of measures

aimed at addressing India’s balance of payments pressures. Notably, the RBI sharply

raised its FY27 inflation forecast by 50bp to 5.1% and reduced its GDP growth forecast by

30bp to 6.6%.

Growth concerns becoming more broad based; inflation concerns downplayed

In our view, the MPC became more vocal on the downside risks to growth at the June

policy meeting, even though the members seemed to agree that growth has so far been

resilient to the Iran war and that there have been green shoots in private capex. External

member Mr. S.Bhattacharya noted that “nowcast” measures suggest slowing growth

momentum, external member Prof. R. Singh flagged external headwinds and rising input