RBI To Hold Rates, Stance Unchanged

Mumbai: Increasing uncertainty reflected in India’s growth and inflation outlook from the West Asian crisis may force the Reserve Bank of India’s Monetary Policy Committee (PPC) to keep the benchmark repo rate at 5.25 percent next week and maintain a neutral stance. The central bank is also expected to announce measures to support liquidity and the rupee. The three-day policy meeting of the MPC (RBI’s rate-setting panel) will begin on April 6.

A lot has changed globally since February 2026, when the RBI announced its last policy. With the outbreak of the US-Israeli war with Iran, the crisis in the Middle East became a cause for concern. The energy infrastructure of major oil-exporting economies has been damaged. The Strait of Hormuz is almost closed. Since the war began on February 27, 2026, oil prices have risen 63 percent to $118 per barrel by March 31, 2026, as global central banks prepare for its impact on inflation and growth. While India’s 10-year G-Sec yield rose by 38 basis points to cross the 7 percent mark, the rupee fell 4.22 percent to cross 95 per dollar as foreign investors dumped stocks worth $13.6 billion in March alone.

“We expect the RBI to keep the repo rate constant at 5.25 per cent in its April 2026 policy. The stance is also expected to remain neutral as the central bank is likely to remain cautious about the evolving situation. The tone will be cautious rather than hawkish. We also believe this is the end of the rate cut cycle and the RBI will now remain in a long pause. However, there may be measures announced to support liquidity and INR,” said Sonal Bandhan. Bank of Baroda economist said in a report.