RBI Holds Steady: MPC Meet Signals Likely Policy Rate Continuation
RBI’s MPC meeting begins today; economists anticipate policy rate to remain steady amid cautious inflation stance.
The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) began on Monday, with market analysts widely expecting the central bank to maintain the repo rate at its current level of 5.25 per cent. The meeting, scheduled from April 6 to April 8, comes amid heightened uncertainty stemming from geopolitical tensions in West Asia and rising crude oil prices.
Analysts said the focus will be on the RBI’s assessment of inflation, growth, and the future trajectory of interest rates rather than immediate policy changes. “We do not expect any immediate liquidity or currency management measures, as the RBI has been acting as and when required,” said Madan Sabnavis, Chief Economist at Bank of Baroda, highlighting the central bank’s cautious approach.
Global factors, particularly the surge in Brent crude prices, which hovered around $100 per barrel in March, are expected to influence the RBI’s projections. Experts noted that while the recent cycle of rate cuts appears to have ended, the possibility of a rate hike later in the financial year cannot be ruled out if inflation breaches the upper tolerance band of 6 per cent.
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HSBC Global Investment Research said the upcoming policy is likely to focus on communication to address concerns arising from elevated oil prices. Despite the external shock, the bank’s economists expect no immediate rate hikes, with the RBI likely prioritizing a one-year-ahead inflation outlook that remains relatively manageable.
Meanwhile, a report by SBI Research suggested that the RBI may need to consider tools such as “Operation Twist” to manage government bond yields and ensure stability in financial markets, while also addressing pressures on the external sector. Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India, noted that liquidity conditions would need careful management to support the rupee amid ongoing volatility.
The central bank has been active on the liquidity front in recent months through Open Market Operations (OMO) purchases of government securities and Variable Rate Repo (VRR) auctions. The RBI had last cut rates by a cumulative 25 basis points in December 2025, a stimulus most economists now believe has run its course, setting the stage for a measured approach in the current MPC meeting.
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