Business
RBI Likely to Maintain Cautious Stance as Global Uncertainty Persists
Reserve Bank of India Governor Sanjay Malhotra is set to announce the Monetary Policy Committee’s decision on Friday, with economists widely expecting the central bank to keep the repo rate unchanged at 5.25 per cent. Rising geopolitical tensions in West Asia and their potential impact on inflation and growth are seen as key factors behind the cautious stance.
The Reserve Bank of India (RBI) is expected to maintain the benchmark repo rate at 5.25 per cent when Governor Sanjay Malhotra announces the outcome of the latest Monetary Policy Committee (MPC) meeting on Friday.
The six-member MPC began its three-day deliberations on Wednesday amid growing concerns over global economic uncertainty, particularly the ongoing conflict in West Asia and its potential implications for inflation, energy prices, and economic growth.
According to a PTI poll of economists and treasury heads, a majority of market participants expect the central bank to leave interest rates unchanged in the current policy review. The expectation reflects the RBI’s balancing act between supporting economic growth and containing inflationary pressures.
A key concern for policymakers is the recent surge in global crude oil prices triggered by geopolitical tensions in West Asia. As India is heavily dependent on oil imports, sustained increases in energy prices could push up inflation and affect economic activity.
Analysts believe the central bank may prefer to assess the evolving global situation before making any further policy adjustments. While inflation has shown signs of moderation in recent months, uncertainty surrounding commodity prices and supply chains continues to pose risks.
Many economists also expect the RBI to maintain a cautious policy stance and monitor incoming economic data closely. Some respondents to the poll indicated that if inflationary pressures intensify, the central bank could consider resuming policy tightening later in FY27.
Apart from the repo rate decision, market participants will closely watch the RBI’s updated inflation and growth projections, as well as any commentary regarding liquidity conditions, external risks, and the outlook for the Indian economy.
The MPC’s decision is expected to influence borrowing costs, investment sentiment, banking sector activity, and overall financial market expectations in the months ahead.