Page 26 - Policy Economic Report- June'26

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Monetary Policy Outlook

The Reserve Bank of India (RBI) maintained a cautious approach to monetary policy during its June 2026
Monetary Policy Committee (MPC) meeting by keeping the policy repo rate unchanged at 5.25 % while
retaining its neutral policy stance. The decision reflects the central bank's efforts to balance the need to
support economic growth with the emerging risks arising from higher international crude oil prices,
exchange rate pressures, and evolving geopolitical developments.

Although headline consumer inflation has remained below the RBI's medium-term target of 4 % for an
extended period, policymakers acknowledged that recent developments in global energy markets and
supply chains could increase inflationary pressures over the coming months. Rising crude oil prices,
uncertainty surrounding the southwest monsoon, and imported inflation remain key risks that could
influence future monetary policy decisions.

The RBI reiterated that future policy decisions will remain data-dependent and will continue to focus on
maintaining price stability while supporting sustainable economic growth. As global uncertainty persists,
monetary policy is expected to remain calibrated, with adequate liquidity and financial stability continuing
to support investment, credit growth, and domestic economic activity.

Manufacturing and Services Activity - India PMI

India's private sector continued to expand at a robust pace during June 2026, although growth moderated
from the strong momentum recorded in previous months. According to the HSBC Flash India PMI survey,
the Composite PMI Output Index declined to 57.4 in June from 59.3 in May, marking a three-month low
but remaining comfortably above the neutral threshold of 50, indicating continued expansion in overall
business activity. The moderation reflected softer growth across both manufacturing and services amid
easing demand conditions and higher input costs.

Figure 14: HSBC India Composite PMI Output Index and GDP Growth (2013–2026)

Source: HSBC, S&P Global PMI Page | 25

June 2026