MPC Minutes Signal Caution: RBI Holds Rates, Flags Hike Risk Amid Oil Shock
April 23, 2026
RBI MPC minutes show crude oil surge from the Iran war drove the decision to hold rates at 5.25%. Panel flags possible rate hike if inflation risks intensify, while India’s growth outlook is trimmed to 6.9%.
India’s Monetary Policy Committee (MPC) minutes, published on Wednesday, showed that the spike in crude oil prices driven by the war in Iran was a key reason for maintaining the status quo on interest rates. At its April 6–8 meeting, the Reserve Bank of India’s rate-setting panel held the benchmark repo rate steady at 5.25% for the second consecutive time and retained its neutral stance.
The minutes showed that MPC members would consider a possible rate hike only if elevated crude prices spill over into broader economic activity and fuel inflationary risks.
“The MPC noted that the intensity and duration of the conflict in West Asia, and the resultant damage to energy and other infrastructure, add risks to the inflation and growth outlooks,” the minutes said.
Supply chain disruptions have further unsettled global markets, with the Strait of Hormuz now effectively constrained by both Iran and the US. The war, which began on February 28, has pushed global crude prices to multi-year highs, with benchmark Brent crude touching $119 per barrel.
To prevent oil prices from surging to $150 per barrel, the US lifted sanctions on Russian oil and extended waivers, while the International Energy Agency released emergency reserves in early March.
“The macroeconomic impact of the conflict on the global economy, however, would depend on its longevity, scale, and the pace and timeline for normalisation of global supply chains,” MPC external member Indranil Bhattacharya said.
Indian economy still a bright spot
Despite uncertainty surrounding the war and its ripple effects on the global economy, India remains well positioned to absorb the shocks, the minutes said, albeit with some inflationary pressure.
However, the RBI has revised down its growth projection, with the economy now expected to expand at 6.9% in 2026–27, compared with the earlier estimate of 7.6%.
The minutes showed that MPC members would consider a possible rate hike only if elevated crude prices spill over into broader economic activity and fuel inflationary risks.
“The MPC noted that the intensity and duration of the conflict in West Asia, and the resultant damage to energy and other infrastructure, add risks to the inflation and growth outlooks,” the minutes said.
Supply chain disruptions have further unsettled global markets, with the Strait of Hormuz now effectively constrained by both Iran and the US. The war, which began on February 28, has pushed global crude prices to multi-year highs, with benchmark Brent crude touching $119 per barrel.
To prevent oil prices from surging to $150 per barrel, the US lifted sanctions on Russian oil and extended waivers, while the International Energy Agency released emergency reserves in early March.
“The macroeconomic impact of the conflict on the global economy, however, would depend on its longevity, scale, and the pace and timeline for normalisation of global supply chains,” MPC external member Indranil Bhattacharya said.
Indian economy still a bright spot
Despite uncertainty surrounding the war and its ripple effects on the global economy, India remains well positioned to absorb the shocks, the minutes said, albeit with some inflationary pressure.
However, the RBI has revised down its growth projection, with the economy now expected to expand at 6.9% in 2026–27, compared with the earlier estimate of 7.6%.