RBI Likely to Hold Rates in April Amid Inflation Concerns

The Reserve Bank of India is expected to keep its benchmark repo rate unchanged at 5.25 per cent in the upcoming April monetary policy review, as policymakers grapple with rising inflation risks linked to ongoing geopolitical tensions in West Asia, economists said.

A poll of more than a dozen economists indicates that heightened uncertainty surrounding crude oil prices, volatile commodity markets, and sharp currency fluctuations — which have pushed the Indian rupee to record lows — have complicated the central bank’s policy outlook. Analysts believe the RBI will adopt a cautious approach, prioritising inflation control over any immediate rate adjustments.

“Given the uncertainty around crude oil prices and geopolitical developments, the RBI is likely to remain on pause in the April policy and closely monitor incoming inflation data before taking any further action,” said Aditi Nayar, Chief Economist at ICRA.

The ongoing tensions in West Asia have raised concerns over supply disruptions and energy price spikes, both of which could feed into domestic inflation. Economists warn that any sustained rise in crude oil prices may put additional pressure on India’s import bill and currency, further complicating inflation management.

Market participants will closely watch the RBI’s updated projections on growth and inflation, along with its policy stance, for cues on the future trajectory of interest rates. While economic growth remains resilient, the balance between supporting growth and containing inflation is expected to guide the central bank’s decisions in the near term.

The RBI had earlier maintained a pause in rate changes after a series of hikes aimed at curbing inflation. With global uncertainties persisting, experts believe the central bank is likely to extend its wait-and-watch strategy in the April review.