RBI policy meet begins; inflation risks in focus
Policymakers expected to stay cautious amid geopolitical volatility
image for illustrative purpose
New Delhi: The Reserve Bank of India’s Monetary Policy Committee (MPC) began its three-day meeting on Monday, with markets widely expecting a status quo on the repo rate amid rising global uncertainties triggered by the West Asia crisis.
The six-member panel, chaired by Governor Sanjay Malhotra, will announce its decision on Wednesday. The policy review comes at a time when crude oil prices have surged above USD 100 per barrel following geopolitical tensions, raising concerns over inflation. Economists estimate that every USD 10 increase in crude prices could push inflation up by as much as 0.60 percentage points.
Retail inflation, though still within the RBI’s comfort zone, has inched up to 3.21 per cent in February. However, risks remain from imported inflation due to a weakening rupee, which has depreciated over 4 per cent since the conflict began.
Experts believe the MPC will maintain its neutral stance, prioritising flexibility as it assesses evolving inflation dynamics. While the RBI has cut rates by 125 basis points since February 2025, including a 25 bps reduction in December, the easing cycle is now seen as nearing its end.
Analysts say the central bank’s commentary on inflation, growth projections and future rate trajectory will be key. Some warn that a rate hike later in the fiscal cannot be ruled out if inflation breaches the 6 per cent upper tolerance band.
The RBI is also expected to monitor liquidity conditions, capital flows and bond markets closely, and may deploy tools like Operation Twist if needed to manage yields and ensure financial stability.
