The Reserve Bank of India (RBI) cannot make any changes in the interest rates in the Monetary Policy Committee (MPC) meeting to be held between 6 to 8 April. According to the research report of State Bank of India, considering the current global situation, RBI will adopt the same stance as it is currently.
Uncertainty increased due to West Asia conflict
The report says that the ongoing tension in West Asia has increased instability across the world. This has had a big impact especially on the oil market. Global oil supply has been affected by the blockage in the Strait of Hormuz, which is considered to be the biggest shock since 1973.
Impact is visible on India also
According to the report, India is also not untouched by this situation. Rupee remains above 93 per dollar and the price of crude oil is above 100 dollars per barrel. Due to this, imported inflation is increasing.
Fear of increasing inflationary pressure
There is concern about inflation within the country also. According to the report, imported inflation has already reached 5.4% and may increase further. Retail inflation is expected to remain above 4.5% in the coming three quarters.
RBI will adopt a cautious approach
This will be the first policy meeting of RBI after the West Asia conflict, so the central bank can be very cautious in its statements and decisions.
Pressure on rupee and foreign investment
The report also said that there was an FII outflow of $16.6 billion in FY26, which is the highest since 1991. Due to this, there is pressure on the rupee and the balance of payments (BoP) may remain in deficit in FY27 also.
Focus on liquidity more than interest rates
SBI believes that RBI will focus not only on interest rates but also on maintaining liquidity and stability in the market. For this, steps like Operation Twist can be taken. In the current situation, the biggest challenge for RBI is inflation, global tension and weakness of rupee. In such a situation, instead of changing interest rates, maintaining stability is considered a better strategy.