The three-day long meeting of the Monetary Policy Committee of the Reserve Bank of India to consider the monetary policy began on Monday. This is the first bi-monthly monetary review meeting of the current financial year. This meeting is taking place at a time when there is a possibility of keeping the policy rate unchanged amid the fear of rising inflation due to the West Asia crisis. The decision of the six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Sanjay Malhotra, will be announced on Wednesday.
RBI has reduced the policy rate repo by a total of 1.25 percent from February 2025 till now. This is the biggest cut since 2019. RBI last cut the repo rate by 0.25 percent in December last year. Status quo was maintained in the last meeting in February. The MPC statement will be released on April 8 after the conclusion of the three-day meeting. The announcement can be watched live on RBI’s official social media channels, including YouTube. This announcement will be made on Wednesday at 10 am.
What things will be taken care of?
According to experts, MPC members will take into account the ongoing tensions in West Asia, volatility in commodity prices and fluctuations in the value of the domestic currency. He said retail inflation has come close to the RBI’s medium-term target of four per cent, but the recent rise in global crude oil prices has raised concerns about the impact on domestic prices. According to an estimate, an increase of $10 per barrel in crude oil prices increases inflation by 0.60 percent. The Reserve Bank has the responsibility of keeping retail inflation at four percent with a variation of two percent.
Neutral stance may remain intact
Crude oil prices were around US $ 60 per barrel for a long time. It has risen to more than $100 a barrel since the conflict began in late February. Additionally, the value of the rupee has fallen by more than four percent since the war, which has also impacted imported inflation. Experts also believe that the central bank will maintain its current neutral stance in the upcoming review, reflecting its preference to maintain stability amid changing inflation conditions and global uncertainties. In recent times, central banks of countries like Australia and Japan have increased interest rates to control inflation, while Colombia and Brazil have also taken similar strict measures.
When was the last change?
Domestically, RBI has reduced interest rates by a total of 125 basis points since February 2025. The rates were last reduced in December, after which most analysts expected that there would be no change in the rates. Earlier, Reuters had reported that the central bank will keep rates steady at 5.25% until 2026, while it assesses the impact of previous rate cuts. However, economists now believe that due to the rapidly changing global circumstances, RBI may adopt a cautious stance in the upcoming MPC meetings. Nevertheless, it is expected that the rates will remain unchanged in the near future.
What do experts say?
Currency weakness remains another major concern, with the rapid fall of the rupee adding to the pressure of imported inflation. Some economists have also warned of a possible “Super El Nino” event, which could disrupt food production and lead to more fluctuations in inflation in the coming months. ICRA Chief Economist Aditi Nair said the RBI is expected to wait and see for more data before making any policy changes.