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RBI Expected to Hold Rates at 5.25% Amid Iran War, High Oil Prices

The Reserve Bank of India is widely expected to maintain the policy repo rate at 5.25% and retain a neutral stance in its upcoming Monetary Policy Committee meeting. This decision comes against the backdrop of the Iran war, which has closed the Strait of Hormuz and pushed global oil prices above $100 per barrel, creating inflationary pressures. The central bank is likely to announce its full-year growth and inflation forecasts while monitoring the conflict's impact, potentially marking the end of the current rate-cut cycle. The RBI may also consider measures to support liquidity and stabilize the Indian rupee amid volatile foreign portfolio investment flows.

Key Points: RBI April MPC Preview: Rate Pause Likely as Oil Tops $100

  • RBI rate pause expected
  • Iran war spurs oil above $100
  • Neutral monetary stance to continue
  • Growth, inflation forecasts due
  • Prolonged pause may end rate-cut cycle
2 min read

RBI likely to keep repo rate unchanged at 5.25%, maintain neutral stance in April MPC: BoB Report

RBI likely to keep repo rate unchanged at 5.25% with neutral stance in April MPC amid Iran war, surging oil prices, and global volatility, says BoB report.

"We expect RBI to hold policy repo rate unchanged at 5.25 per cent and keep the stance as neutral - Bank of Baroda Report"

New Delhi, April 1

The Reserve Bank of India is expected to keep the policy repo rate unchanged at 5.25 per cent in the upcoming Monetary Policy Committee meeting and maintain its neutral stance, according to a report by Bank of Baroda.

The report noted that global conditions have changed significantly since the RBI's last policy announcement in February 2026.

It highlighted that the outbreak of the Iran war has heightened concerns in the Middle East, with damage to energy infrastructure in major oil-exporting economies. The situation has led to the Strait of Hormuz being virtually closed, pushing global oil prices above USD 100 per barrel.

It stated, "We expect RBI to hold policy repo rate unchanged at 5.25 per cent and keep the stance as neutral".

Amid rising geopolitical tensions, global central banks are preparing for the impact of elevated oil prices on inflation. Financial markets have also remained volatile, leading to pressure on foreign portfolio investment (FPI) flows from India, equity markets, bond yields and the Indian rupee.

Given this backdrop, the report said the RBI is likely to announce its full-year growth and inflation forecasts while factoring in the impact of the ongoing conflict on the domestic economy.

It added that the central bank is expected to remain vigilant and hold rates steady for now, without changing its stance from neutral.

The report further stated that this could mark the end of the rate cut cycle, with the central bank likely to adopt a prolonged pause going forward. It added that the impact of the war on growth and inflation will become clearer over the next 3-4 months, after which the RBI may reassess its policy trajectory.

According to the report, if oil prices remain above USD 100 per barrel for a sustained period and inflation breaches the RBI's upper tolerance band of 6 per cent, there could be a possibility of a rate hike by the central bank towards the end of FY27.

In the upcoming policy, the RBI may also consider measures to support liquidity and stabilise the Indian rupee, the report added.

The RBI's MPC meeting is scheduled to be held on April 6, 7 and 8, with the policy outcome to be announced by RBI Governor Sanjay Malhotra on the last day of policy at 10 AM.

- ANI

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Reader Comments

R
Rohit P
Good decision to hold rates. The last thing our economy needs is more uncertainty. Let's wait and watch how the global situation plays out over the next few months. Stability is key.
A
Aditya G
While I understand the cautious stance, I respectfully disagree. Holding rates high for too long could stifle the investment and consumption needed for growth. The common man is already feeling the pinch of high EMIs. The RBI should consider a small cut to signal support to the domestic economy, even if the stance remains neutral.
S
Sarah B
The mention of a possible rate hike by FY27 end is worrying. $100+ oil is a nightmare for household budgets. Hope the government works on strategic reserves and alternative energy sources alongside the RBI's measures.
K
Karthik V
Neutral stance makes perfect sense. It gives the MPC flexibility to move either way depending on data. The war in the Middle East is a major external shock. Jai Hind, hope our economy remains resilient. 🇮🇳
M
Meera T
Focus on stabilizing the rupee is crucial. Volatile FPI flows can hurt our markets. The RBI has a tough job balancing growth and inflation in this global mess. Best of luck to Governor Malhotra and the team.

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