Reserve Bank of India (RBI) Governor Sanjay Malhotra (file photo) | Photo Credit: REUTERS/FRANCIS MASCARENHAS

RBI Governor Sanjay Malhotra on Wednesday said it would be premature to talk about a rate hike even as external uncertainty is weighing on the rate-setting monetary policy committee (MPC).

All six members of the MPC, in its meeting held during June 3 to 5, 2026, voted unanimously to keep the policy repo rate unchanged at 5.25 per cent and also decided to continue with the neutral stance.

They preferred a cautious “wait and watch” approach over immediate policy action amid rising inflation risks, slowing growth and powerful external shock emanating from the West Asia conflict.

In an interview to ET Now, Malhotra said: “If it was so certain that we are going to hike (the repo rate) in the coming months, then we would have changed the stance from neutral to restrictive. We did not do that.

“We did not do that precisely because there is elevated uncertainty. So I think it will be premature to talk about a rate hike. What we have said is that we are cautious.”

The Governor observed that if the MPC was sure about the second round effects of inflation, it would have acted.

“As of now, what we see is that the inflation is still less than 4% (May reading: 3.93% year-on-year), Most of it due to food. Core inflation is about 2 plus per cent (2.4% or so). But yes, WPI did go up. It was 8.3% in April, 9.7% last month. So we are watching that.

“Again, there is a lot of concentration. Lot of the increase in WPI is because of fuel. Now, whether it generalizes or not is something that we have to wait and watch. That’s why last policy, we said this in so many words that we are looking as to whether or not it generalizes. And accordingly, we make the next policy move,” Malhotra said.

Published on June 24, 2026