The RBI MPC is widely expected to hold the repo rate on June 5. But markets would be mistaken to treat this as a non-event. The real story is what the committee says, not what it does.
The macro backdrop is becoming more complex. Wholesale inflation is trending higher, the rupee has weakened meaningfully in recent months, and a below-normal monsoon is already factored into expectations. The RBI is navigating a genuinely difficult environment.
A neutral stance today does not imply a neutral trajectory. If West Asia does not stabilise and energy prices remain elevated, a rate hike in H2 FY27 can no longer be dismissed as a tail risk, it is a scenario markets may not be fully pricing in.
Markets will take their cue not from the decision, but from the direction of guidance.