RBI Expected to Maintain Repo Rate Amid Inflation and Geopolitical Tensions
Economists see RBI MPC holding rates amid inflation fears, West Asia crisis
Business Standard
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Economists predict that the Reserve Bank of India (RBI) will keep the benchmark repo rate unchanged at 5.25% in the upcoming April monetary policy review due to rising inflation concerns linked to the West Asia crisis. The RBI's decision will focus on managing inflation while monitoring global economic conditions.
- 01RBI likely to hold repo rate at 5.25% amid inflation concerns.
- 02Geopolitical tensions and rising crude oil prices are key factors.
- 03Economists predict cautious communication from the RBI.
- 04Inflation projections may be revised upward if crude prices remain high.
- 05Focus will shift towards managing inflation rather than supporting growth.
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Economists anticipate that the Reserve Bank of India (RBI) will maintain the benchmark repo rate at 5.25% during its April monetary policy review, primarily due to inflation pressures stemming from the ongoing crisis in West Asia. The geopolitical instability has led to increased volatility in commodity prices and a depreciation of the Indian rupee, which is currently above ₹93 per dollar. Chief Economist at ICRA, Aditi Nayar, noted that the RBI is likely to pause and closely monitor inflation data before making any changes. SBI's Chief Economist, Soumya Kanti Ghosh, highlighted that the rising crude oil prices, now above $100 per barrel, are contributing to imported inflation across India. Economists also expressed concerns over potential second-round effects on domestic prices, particularly in fuel and transportation sectors. With the RBI's monetary policy committee meeting scheduled to start on Monday, the outcome will be closely watched, especially regarding the central bank's GDP and inflation forecasts amidst global uncertainties. The overall sentiment among economists is that the RBI will adopt a cautious approach, focusing on inflation management rather than aggressive growth support.
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If the RBI maintains the repo rate, it could stabilize borrowing costs for home loans and other loans, but rising inflation may still affect consumer prices.
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