RBI Likely To Hold Repo Rate At 5.25% In April Policy, Inflation Risks From West Asia Crisis Keep Rate Cut Hopes On Hold
April 05, 2026
RBI is likely to keep the repo rate unchanged at 5.25 percent in April amid rising inflation risks from the West Asia crisis. High crude prices, weak rupee, and global uncertainty are key concerns. The central bank is expected to maintain a cautious stance and closely monitor inflation trends.
Mumbai: The Reserve Bank of India is expected to keep its key repo rate unchanged at 5.25 percent in the upcoming April monetary policy review. Economists believe rising inflation risks due to the West Asia crisis will make the central bank cautious.
Global Factors Creating Uncertainty
The ongoing tensions in West Asia have created uncertainty in global markets. Crude oil prices have surged above USD 100 per barrel, while the Indian rupee has weakened sharply, crossing 93 against the US dollar.
These factors are increasing imported inflation, making goods and services more expensive in India.
Aditi Nayar said the RBI is likely to wait and watch inflation trends before taking any decision on rates.
Inflation Risks Back in Focus
Although inflation had earlier come close to the RBI’s target of 4%, recent developments have changed the outlook. Experts warn that higher oil prices could push inflation up again.
Soumya Kanti Ghosh said rising crude prices and a weak rupee are already increasing inflation pressure across states.
It is estimated that every USD 10 rise in crude oil prices can increase inflation by up to 0.6 percent.
No Immediate Rate Cuts Likely
The RBI had reduced rates by 1.25 percent since last year to support growth. However, it has paused rate changes in recent policy meetings.
Dipti Deshpande said the central bank may ignore short-term shocks and keep rates steady if inflation remains under control.
Similarly, Madan Sabnavis expects no change in rates, with focus on updated inflation and growth forecasts.
Policy Tone to Remain Cautious
Experts believe the RBI will maintain a neutral stance and stay flexible. The central bank is expected to closely watch:
- Inflation trends
- Currency movements
- Global commodity prices
- Capital flows and market stability
Sakshi Gupta said it may be too early to take decisions based on short-term volatility.
Focus Shifts to Inflation Control
With global risks rising, the RBI’s priority may shift from supporting growth to controlling inflation. Future rate decisions will depend on how long geopolitical tensions and high oil prices continue.
Global Factors Creating Uncertainty
The ongoing tensions in West Asia have created uncertainty in global markets. Crude oil prices have surged above USD 100 per barrel, while the Indian rupee has weakened sharply, crossing 93 against the US dollar.
These factors are increasing imported inflation, making goods and services more expensive in India.
Aditi Nayar said the RBI is likely to wait and watch inflation trends before taking any decision on rates.
Inflation Risks Back in Focus
Although inflation had earlier come close to the RBI’s target of 4%, recent developments have changed the outlook. Experts warn that higher oil prices could push inflation up again.
Soumya Kanti Ghosh said rising crude prices and a weak rupee are already increasing inflation pressure across states.
It is estimated that every USD 10 rise in crude oil prices can increase inflation by up to 0.6 percent.
No Immediate Rate Cuts Likely
The RBI had reduced rates by 1.25 percent since last year to support growth. However, it has paused rate changes in recent policy meetings.
Dipti Deshpande said the central bank may ignore short-term shocks and keep rates steady if inflation remains under control.
Similarly, Madan Sabnavis expects no change in rates, with focus on updated inflation and growth forecasts.
Policy Tone to Remain Cautious
Experts believe the RBI will maintain a neutral stance and stay flexible. The central bank is expected to closely watch:
- Inflation trends
- Currency movements
- Global commodity prices
- Capital flows and market stability
Sakshi Gupta said it may be too early to take decisions based on short-term volatility.
Focus Shifts to Inflation Control
With global risks rising, the RBI’s priority may shift from supporting growth to controlling inflation. Future rate decisions will depend on how long geopolitical tensions and high oil prices continue.