RBI MPC coming up: Here are 6 things to watch out for

Reserve Bank of India

The Reserve Bank of India's (RBI's)  Monetary Policy Committee (MPC) is set to announce its interest rate decision on June 6. The MPC is meeting at a time when the Consumer Price Index (CPI) inflation, at 3.16 percent in April, has entered into the 2-4 percent medium-term target band of RBI, and support is now required to kindle the animal spirits and revive growth.

Here are the six key things to watch for in tomorrow's RBI announcement:

Repo rate

The repo rate, which is the rate at which the central bank lends short-term funds to banks, currently stands at 6 percent. This is after two consecutive rate cuts since Sanjay Malhotra took charge as Governor in December 2024. Is the MPC headed for a hattrick – a third consecutive rate cut?

Most likely, say a majority of economists and bankers who participated in Moneycontrol's poll. They expect a 25 bps reduction in the repo and say that it's essential to support growth. However, a few economists, including those in the State Bank of India (SBI), say we may also see a 50-bps rate cut.

Monetary policy stance

All those polled by Moneycontrol said the central bank will maintain its ‘accommodative’ stance to support growth.

The policy stance indicates the thinking of the rate-setting panel. An accommodative one shows that the tilt is towards a rate cut, while a neutral stance suggests rate action can happen on either side.

In April 2025, the central bank changed its stance from ‘neutral’ to ‘accommodative.’  Delivering his speech after the April MPC meet, Malhotra said that RBI’s stance provides policy rate guidance, without any direct guidance on liquidity management.

Will the RBI revise the GDP growth target?

Most economists and treasury heads said that the central bank is unlikely to change its projections on the growth front, considering the risks amid global uncertainties. However, some believe there will be a downward revision of RBI's growth projection.

During the April policy review, Malhotra had revised India's growth for FY26 to 6.5 from 6.7 percent (announced in the February meeting).

Also, the Q1 and Q2 FY26 projections in April were sharply lower than what was stated in December 2025. In April, the central bank said that the Q1 and Q2 FY26 GDP growth would be 6.5 and 6.7 percent, respectively, and not 6.9 and 7.3 percent, as was announced after the December policy meeting.

Will RBI tweak the inflation projection?

In the last policy review, the RBI reduced its inflation projection to 4 percent for FY26.

Experts say the central bank may revise its inflation projection downwards on June 6 following a cooling off of inflation, particularly food inflation, which dropped to  1.78 percent in April from 2.69 percent in the previous month. The overall headline inflation has also stayed within RBI's medium-term target.

However, it may be too soon to predict the extent of downward revision given the vagaries of the monsoon and other adverse weather events.

Liquidity measures

Given the  infusion over Rs 3 lakh crore of liquidity since December last year, money market experts are of the view that the central bank may continue durable liquidity infusion and announce longer tenure variable rate repo auctions instead of daily VRR auctions.

This is because the RBI is seeing less demand from lenders for the daily auctions amid huge surplus liquidity in the banking system.

In the last few months, the central bank has infused durable liquidity into the banking system through open market operations (OMO) purchases and USD / INR buy / sell swap auctions, besides daily VRR auctions.

The heavy infusion was because the banking system was facing a liquidity deficit from mid-December last year.

Changes in banking norms

The RBI's decision on gold loans, ECL (expected credit loss), and project finance norms, as also any commentary on the ongoing investigations at IndusInd Bank, will be closely watched.