New Delhi, April 2: The Reserve Bank of India (RBI) is expected to keep the repo rate steady at 5.25% during its Monetary Policy Committee (MPC) meeting in April 2026. A report released on Thursday indicates that ongoing conflicts in the Middle East and rising oil prices may influence this decision.
According to Bank of Baroda’s report, the era of interest rate cuts has ended, and the RBI may maintain stable rates for an extended period. The central bank is likely to adopt a neutral stance while closely monitoring changing conditions. Additionally, specific measures may be implemented to support liquidity and the Indian rupee.
The report also suggests that if inflation exceeds the upper limit of 6%, interest rates may rise by the end of the year.
It states, “The economic impact of the war on growth and inflation will become clearer in the next 3-4 months. After that, the RBI will decide on the direction of interest rates.”
Since the last policy meeting, the US-Iran conflict has disrupted energy supplies, particularly due to the closure of the Strait of Hormuz, causing crude oil prices to soar above $100 per barrel.
The markets have experienced significant volatility. This conflict has led foreign portfolio investors (FPIs) to withdraw funds from India, bond yields have risen, and the Indian rupee has fallen to a record low of 94.83 against the dollar.
The report highlights that the war will affect global economic growth and inflation, and India will not be immune to these effects. Therefore, the RBI may revise its GDP and inflation forecasts for the fiscal year 2027.
The Chief Economic Advisor’s recent monthly economic bulletin warns of a substantial increase in the current account deficit (CAD) for fiscal year 2027. The bank estimates GDP growth to be between 7.0% and 7.2% for fiscal year 2027, with a similar increase in the current account deficit anticipated.
Arpit Soni has had a passion for journalism since the beginning. Now he has turned this hobby into his profession. Arpit, who is a resident of Udaipur, enjoys editing and writing news related to journalism. He has worked as a Senior Content Producer in several important roles at Bhaskar, Patrika, Pratahkal, Punjab Kesari, and Times. Arpit completed his schooling in Udaipur and Jaipur. He has been working in the media industry for more than 10 years, and his journey is still continuing. ✍️📚
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