The Reserve Bank of India is expected to hold interest rates steady when Governor Sanjay Malhotra announces the outcome of the Monetary Policy Committee (MPC) meeting on Friday.
While there is little expectation of a rate move this time, the policy assumes importance because it comes amid fresh tensions in West Asia that have unsettled global markets and sparked concerns over crude oil prices. For a country that imports most of its oil needs, any prolonged rise in prices could complicate the inflation outlook and influence the RBI’s policy calculations in the months ahead. Market participants will also closely track RBI Governor Sanjay Malhotra’s commentary for clues on the rate trajectory in the months ahead.
Most economists believe the central bank is unlikely to make any immediate move on interest rates, preferring to assess evolving global developments before altering its stance.
HSBC Chief India Economist Pranjul Bhandari said the RBI is expected to maintain the status quo for now, though the tone of its guidance will be important. According to her, financial markets are currently factoring in around two rate cuts from the final quarter of 2026 rather than expecting a sharp shift towards tighter monetary conditions.
She also said investors would be watching whether the central bank revises its assumptions on crude oil prices in its latest projections, particularly in light of the recent energy shock and its potential impact on inflation.
According to CareEdge Ratings, India’s GDP growth could be around 6.7 per cent in FY27 if crude oil prices average close to $90 per barrel.
SBI Research has also projected no change in policy rates, arguing that the RBI is likely to continue with a data-driven approach as inflation risks and external uncertainties persist. The report estimates GDP growth at 6.6 per cent in FY27 and around 7.5 per cent in FY26.
The research house further noted that consumer price inflation may remain above 5 per cent for an extended period if fuel prices continue to stay elevated amid global disruptions.
Emkay Global Financial Services has similarly forecast that the MPC will leave rates unchanged. The brokerage believes recent corrections in Brent crude prices and an improving external account position provide some relief, reducing the urgency for policy action.
At its previous policy meeting in April, the MPC had left the repo rate unchanged at 5.25 per cent while retaining its neutral policy stance.