RBI kept the policy repo rate unchanged at 5.25% and maintained a neutral stance.
The central bank lowered its GDP growth projection for FY2025‑26 from 6.9% to 6.6%, citing rising oil prices, a disrupted monsoon season and a sluggish foreign economy.
Inflation expectations were revised upward to 5.1% for the year, up from 4.6%, driven by higher crude oil prices linked to the U.S.–Israel‑Iran conflict and rising food costs.
India imports over 80% of its crude oil; the RBI expressed concern over oil‑price‑driven pressure on the rupee, noting that USD/INR has reached record lows and prompting direct market intervention.
Equity markets reacted negatively: the BSE Sensex fell 1% month‑to‑date and is down 9% year‑to‑date; the NSE Nifty slipped 0.9% in June and is down 8% year‑to‑date.
The RBI warned that persistent oil‑price pressure could push inflation beyond the revised 5.1% target, potentially necessitating a rate hike later in the year.
Ongoing currency support adds uncertainty to the foreign‑exchange market, with exporters likely to benefit from a weaker rupee while oil‑intensive sectors such as airlines and paints may face margin pressure.
