RBI in ‘Wait and Watch’ Mode? What It Means for Rate Cuts Ahead
April 21, 2026
RBI Governor said that in uncertain times, it is important to be agile and nimble, maintaining a broad policy stance., Economy, Times Now
The Reserve Bank of India Governor Sanjay Malhotra. (File photo)
The Reserve Bank of India (RBI) Governor Sanjay Malhotra on the Iran war has said that the central bank is in a "wait and watch" mode now. "We have been maintaining a neutral stance for the last few policy cycles. It preserves the flexibility to respond as the inflation-growth dynamics evolve," he said.
The Governor highlighted that the present crisis impacts us as West Asia contributes about one-sixth of our exports, one-fifth of our imports, half of our crude oil imports, two-fifths of our fertilisers imports and almost two-fifths of our inward remittances.
Also Read: Rs 2.9 Lakh Crore Exit in March: Mutual Funds Face Biggest Liquidity Shock in Years
"The appropriate monetary policy response to such a supply shock is to look through the first-round effect to the extent that it does not feed into second-round dynamics. Second-round effects are the real concern. They can materialise if the supply chain disruptions continue for long," he said.
Due to the Iran war, the domestic production of oil and gas is being ramped up.
Governor Malhotra said the sources of imports are being diversified. "While there is no shortage of oil, given the reserves maintained by us, there is some rationing of gas for industrial purposes. The oil marketing companies and government have absorbed the price pressures in oil, while passing on some of the price pressures on gas to the consumers," he added.
What it means for rate cuts ahead?
Governor further said that in uncertain times, it is important to be agile and nimble, maintaining a broad policy stance, and avoid making firm commitments of the future path of policy.
"In such circumstances, our broad approach has been to be even more data dependent and to continuously reassess the balance of risks," he said.
Also Read: Rs 1.68 Lakh Crore Gone in 4 Months! What’s Behind Foreign Investors Exit?
What began as a supply shock can become embedded in the general price level. Preventing this entrenchment is where monetary policy has a primary role to play through its influence on inflation expectations rather than through blunt demand compression, he said.
Earlier, Union Finance Minister Nirmala Sitharaman had said RBI has room to lower interest rates and extend targeted support to sectors facing stress, even as it navigates a challenging global environment.
The RBI last reduced the repo rate on December 5, 2025, when the MPC cut it by 25 basis points from 5.50% to 5.25%. Since then, the RBI has maintained a pause over the rate cuts. Next MPC meeting is scheduled for June.
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Vikas Kumar is Deputy Editor (Business) at Times Now driving coverage across policy, economy and markets. He possesses nearly a decade of experience i ... View More
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The Reserve Bank of India (RBI) Governor Sanjay Malhotra on the Iran war has said that the central bank is in a "wait and watch" mode now. "We have been maintaining a neutral stance for the last few policy cycles. It preserves the flexibility to respond as the inflation-growth dynamics evolve," he said.
The Governor highlighted that the present crisis impacts us as West Asia contributes about one-sixth of our exports, one-fifth of our imports, half of our crude oil imports, two-fifths of our fertilisers imports and almost two-fifths of our inward remittances.
Also Read: Rs 2.9 Lakh Crore Exit in March: Mutual Funds Face Biggest Liquidity Shock in Years
"The appropriate monetary policy response to such a supply shock is to look through the first-round effect to the extent that it does not feed into second-round dynamics. Second-round effects are the real concern. They can materialise if the supply chain disruptions continue for long," he said.
Due to the Iran war, the domestic production of oil and gas is being ramped up.
Governor Malhotra said the sources of imports are being diversified. "While there is no shortage of oil, given the reserves maintained by us, there is some rationing of gas for industrial purposes. The oil marketing companies and government have absorbed the price pressures in oil, while passing on some of the price pressures on gas to the consumers," he added.
What it means for rate cuts ahead?
Governor further said that in uncertain times, it is important to be agile and nimble, maintaining a broad policy stance, and avoid making firm commitments of the future path of policy.
"In such circumstances, our broad approach has been to be even more data dependent and to continuously reassess the balance of risks," he said.
Also Read: Rs 1.68 Lakh Crore Gone in 4 Months! What’s Behind Foreign Investors Exit?
What began as a supply shock can become embedded in the general price level. Preventing this entrenchment is where monetary policy has a primary role to play through its influence on inflation expectations rather than through blunt demand compression, he said.
Earlier, Union Finance Minister Nirmala Sitharaman had said RBI has room to lower interest rates and extend targeted support to sectors facing stress, even as it navigates a challenging global environment.
The RBI last reduced the repo rate on December 5, 2025, when the MPC cut it by 25 basis points from 5.50% to 5.25%. Since then, the RBI has maintained a pause over the rate cuts. Next MPC meeting is scheduled for June.
Get Latest News Live on Times Now along with Breaking News and Top Headlines from Business, Economy and around the World.
Latest News
Vikas Kumar author
Vikas Kumar is Deputy Editor (Business) at Times Now driving coverage across policy, economy and markets. He possesses nearly a decade of experience i ... View More
News
Business
Economy
End of Article