The upcoming monetary policy meeting of the Reserve Bank of India (RBI), scheduled for April 6–9, is expected to see the Monetary Policy Committee (MPC) maintain a pause on policy rates, even as inflation risks, currency pressures and global uncertainties intensify.
According to ICRA, the central bank is likely to prioritise price stability over growth concerns, with CPI inflation projected to inch up to around 4.3% in FY2027. The rating agency has flagged persistent upside risks to inflation, particularly from crude oil prices amid ongoing geopolitical tensions in West Asia, noting that every 10% increase in oil prices could push inflation higher by 40–60 basis points. Despite an expected moderation in GDP growth to about 6.5% in FY2027, ICRA expects the MPC to remain on an extended pause through the fiscal, while continuing to actively manage liquidity conditions.
A similar view has been echoed by SBI Research, which expects the RBI to maintain status quo in the upcoming policy, citing an increasingly volatile global backdrop. The report highlights that disruptions in global oil markets and a sharp rise in imported inflation, exacerbated by the weakening rupee, have complicated the policy environment. It adds that the central bank is likely to focus on liquidity modulation and market stability measures, rather than resorting to immediate rate changes.
Rating agency CRISIL also points towards a pause, with inflation expected to gradually rise and growth remaining relatively resilient, thereby reducing the urgency for any near-term policy action.
However, the sharp depreciation in the rupee has emerged as a key variable ahead of the policy. Persistent foreign portfolio outflows and elevated crude prices have put pressure on the currency, prompting some market participants to draw parallels with the 2013 Taper Tantrum, when the RBI responded with aggressive tightening measures to stabilise the rupee. Against this backdrop, there is a growing debate on whether the central bank may be forced to adopt a more hawkish stance if external pressures intensify further.
While a rate hike is not the base case, some experts believe the risk of a surprise move cannot be entirely ruled out if the rupee continues to weaken sharply or inflation risks escalate. That said, with forex reserves still providing a buffer and growth showing signs of moderation, the more likely outcome remains a hawkish pause, where the RBI holds rates but signals heightened vigilance on inflation and external stability.