Minutes of the Monetary Policy Committee Meeting, June 3 to 5, 2026

The sixty-first meeting of the Monetary Policy Committee (MPC), constituted under Section 45ZB of the Reserve Bank of India Act, 1934, was held from June 3 t...

What Happened

The sixty-first meeting of the Monetary Policy Committee (MPC), constituted under Section 45ZB of the Reserve Bank of India Act, 1934, was held from June 3 to 5, 2026, with the resolution published under Section 45ZL of the Act (mandated within 14 days of the meeting).
The MPC unanimously resolved to keep the policy repo rate unchanged at 5.25%, maintaining the 'neutral' stance — signalling that neither tightening nor easing is immediately indicated, but the path remains data-dependent.
The MPC revised its FY27 real GDP growth projection downward to 6.6% (from the earlier estimate of 6.9%), citing elevated energy prices, global supply chain disruptions, and reduced merchandise export competitiveness from higher freight and insurance costs.
The CPI inflation projection for FY27 was revised upward to 5.1% (from 4.6%), though core inflation remains relatively contained at approximately 4.7%. Inflation stays below the 6% upper tolerance band.
The committee noted that geopolitical tensions — particularly disruptions to crude oil supply routes — pose the primary external risk, alongside El Niño-related agricultural weather risks domestically.

Static Topic Bridges

Monetary Policy Committee (MPC) — Composition and Legal Framework

The MPC is a statutory body created by amending the Reserve Bank of India Act, 1934 through the Finance Act, 2016. The amendment inserted Sections 45ZA to 45ZL into the RBI Act to provide for an institutionalised inflation-targeting framework. Section 45ZB specifically constitutes the six-member MPC.

6 members total: RBI Governor (Chairperson), Deputy Governor in charge of monetary policy, one RBI Board nominee, and three external members appointed by the Central Government
External members serve a four-year term and are not eligible for re-appointment
Decisions are by majority vote; in case of a tie, the RBI Governor has the casting vote
Minutes must be published within 14 days of the meeting (Section 45ZL)

Connection to this news: The June 2026 meeting was the sixty-first such meeting since the MPC's constitution; unanimous decisions reflect the collegial structure the law envisions.

Inflation Targeting Framework

Under Section 45ZA of the RBI Act (as amended by Finance Act 2016), the Central Government, in consultation with the RBI, sets an inflation target once every five years. The current target is CPI inflation of 4% with a tolerance band of ±2% (i.e., 2%–6%). Failure to maintain inflation within this band for three consecutive quarters requires the RBI to submit an explanation to the Central Government.

Target metric: Consumer Price Index (CPI) combined — not WPI
Target: 4% ± 2% (lower bound 2%, upper bound 6%)
Breach threshold: Three consecutive quarters outside the band
The FRBM (Fiscal Responsibility and Budget Management Act) provides the fiscal complement to monetary discipline

Connection to this news: With FY27 CPI projected at 5.1%, inflation remains within the 2%–6% band. The upward revision from 4.6% to 5.1% reflects external supply-side pressures, not demand overheating — consistent with a neutral stance rather than tightening.

Policy Rate Transmission — Repo Rate, CRR, SLR

The repo rate is the rate at which the RBI lends overnight funds to commercial banks under a repurchase agreement. It anchors the short end of the yield curve and transmits to lending rates across the economy. The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are complementary tools for managing systemic liquidity.

Repo Rate (June 2026): 5.25% (last changed December 2025, cut from 5.50%)
CRR (June 2026): 3.00% — the share of net demand and time liabilities banks must hold as cash with the RBI (earns no interest)
SLR (June 2026): 18.00% — the share banks must hold in approved government securities
The rate trajectory: RBI began cutting from 6.50% (early 2025) through successive reductions to current 5.25%

Connection to this news: The decision to hold at 5.25% reflects the MPC balancing act — domestic activity remains steady, but the combination of elevated inflation projection (5.1%) and growth headwinds (revised down to 6.6%) called for a pause rather than a further cut.

Key Facts & Data

Repo Rate (June 5, 2026): 5.25% (unchanged, unanimous decision)
Monetary policy stance: Neutral
FY27 real GDP projection: 6.6% (revised down from 6.9%)
FY27 CPI inflation projection: 5.1% (revised up from 4.6%)
Core inflation FY27: ~4.7%
CRR: 3.00% | SLR: 18.00% (both unchanged)
MPC constituted under: Section 45ZB, RBI Act 1934 (as amended by Finance Act 2016)
Inflation target: CPI 4% ±2% (notified under Section 45ZA)
Minutes published under: Section 45ZL (within 14 days of meeting)
GDP quarterly projections FY27: Q1 6.6%, Q2 6.3%, Q3 6.5%, Q4 6.8%