The Reserve Bank of India’s three-day Monetary Policy Committee (MPC) meeting started on Monday, with expectations of the repo rate remaining unchanged due to heightened uncertainty from the West Asia conflict. The meeting, scheduled from April 6 to April 8, occurs amidst concerns over rising crude oil prices and global geopolitical tensions affecting the inflation outlook. Analysts anticipate the RBI to maintain the status quo in the upcoming policy, closely monitoring the central bank’s commentary on inflation, growth, and future rate trajectory.
Some experts suggest that the rate cut cycle may have concluded, hinting at a potential rate hike later in the fiscal year if inflation surpasses the upper tolerance band of 6 per cent. HSBC Global Investment Research emphasizes that the policy will focus on communication to address issues arising from the surge in oil prices. Despite the current shock, the investment bank’s economists do not foresee immediate rate hikes, as the RBI is likely to concentrate on the one-year ahead inflation trajectory, expected to remain relatively benign.
SBI Research’s report highlights the potential need for the central bank to utilize tools like “Operation Twist” to manage yields and ensure stability in financial markets, while also tackling external sector pressures. Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India, warns of the impact of the crisis on India, with a weakening rupee and elevated crude oil prices leading to imported inflation pressures. He suggests that liquidity conditions should be carefully managed to support the rupee amidst ongoing volatility.
The RBI has been actively addressing liquidity concerns in recent months through Open Market Operations (OMO) purchases of government securities and Variable Rate Repo (VRR) auctions to infuse rupees into the banking system. In December 2025, the RBI reduced rates by a total of 25 basis points to 5.25 per cent, a stimulus that many economists believe has now reached its limit.
