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Informist, Wednesday, Apr. 8, 2026

 

MUMBAI/NEW DELHI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's first bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Wednesday:

 

ECONOMISTS

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INDRANIL PAN, CHIEF ECONOMIST, YES BANK

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From this policy, more than expecting any changes in the rates or the stance, the markets were keenly watching the RBI's forecasts for growth and inflation, as well as its communication during such uncertain times. The RBI projected growth at 6.9% and inflation at 4.6% for 2026-27 (Apr-Mar), while clearly alluding to upside risks to inflation and downside risks to growth.

 

Importantly, the RBI has assumed a normal monsoon for FY27, though we read reports of a heightened risk for El Nino that would depress monsoon rains in the upcoming South West monsoon season for India. Given the inflation trajectory drawn out by the RBI over the quarters of FY27 and hoping that there are no significant downsides to the growth, the chances of any incremental rate cuts have moved close to zero.

 

Rate hikes are also probably some distance away and through FY27 the RBI would probably have to strike the very delicate policy trade-off of keeping inflation pressures in check yet supporting growth. While it is difficult immediately to indicate if the war (between the US and Iran) shock is permanent or transitory, particularly given the two-week ceasefire announced, near-term impact of supply chain disruptions has been well handled by the government as it largely absorbs the cost of higher global crude oil (prices). For now, we think that H1FY27 (Apr-Sept) should not see any tightening of monetary policy while we keep open the chance of a tightening if the war situation persists and domestic inflation is seen getting more entrenched, as might be indicated by the household inflation expectations survey. 

(Meera Nair)

 

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK

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The RBI expectedly kept rates and stance unchanged. After the circulars on restricting offshore speculative activity, the recent de-escalation on the geopolitical front has provided some relief to the rupee, providing room for the RBI to assess the lasting impact on growth-inflation and the persistence of the Balance of Payments deficit.

 

We expect the RBI to be squarely data-dependent henceforth, given the fluidity of the situation. Meanwhile, we expect the RBI to monitor liquidity conditions closely and possibly introduce variable rate reverse repos to ensure the overnight rates graduate higher between repo and Marginal Standing Facility rate. 

(Shubham Rana)

 

RADHIKA RAO, SENIOR ECONOMIST AND EXECUTIVE DIRECTOR, DBS BANK

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With the RBI MPC keeping rates on hold, the policy outlook has shifted from a "benign inflation, strong growth" scenario to a more cautious balancing act, as the central bank seeks to manage renewed inflationary pressures while sustaining growth. The neutral, data-dependent stance provides flexibility to respond if geopolitical risks, including a prolonged war, intensify.

 

The RBI has highlighted concerns that a sustained supply-side shock could spill over into broader demand pressures. Given the primarily supply-driven nature of the shock, monetary policy would be a blunt and potentially ineffective tool in the near term to anchor inflation expectations. Elevated risks from oil prices and geopolitical tensions limit the scope for near-term easing, reinforcing a prolonged pause.

 

Rate hikes would only be considered if second-round inflation effects begin to materialise more clearly, potentially driven by higher fuel prices and a subdued currency. 

(Astha Oriel)

 

DIPTI DESHPANDE, PRINCIPAL ECONOMIST, CRISIL LTD.

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The Monetary Policy Committee of the Reserve Bank of India maintaining status quo on both the policy rate and monetary policy stance was along expected lines. The raft of uncertainties bred by the West Asia conflict calls for prudence. It would be premature to draw firm conclusions on the impact or pre-empt the ultimate outcome of the West Asia conflict. At this juncture, all that is required is keeping ready adequate policy buffers and staying nimble to act as the situation evolves.

 

So far, the availability of fiscal space to absorb part of the higher energy costs due to the conflict has contained their impact on retail inflation. The government has directed supply of liquefied petroleum gas and liquefied natural gas to domestic consumers and priority sectors and maintained retail petrol and diesel prices (standard variant). However, if crude oil price pressures persist, the upside risks to retail inflation are inevitable.

 

The projections on growth and inflation--the first estimates by the MPC for fiscal 2027 following the release of the new data series--reflect the recognition that the impact on growth could be greater than that on inflation in the near term. Part of the moderation in India's GDP growth expected is also due to a statistical high-base effect of fiscal 2026. The MPC projects inflation at 4.6% for fiscal 2027, within its target range. The committee expects GDP growth to moderate to 6.9% this fiscal from 7.6% in the previous year.

 

Additionally, producers are bearing the brunt of the dual shock of energy and other input shortages and price spikes, which could impact economic growth. Some impact on the economy could be enduring, though the overall fallout will depend on the duration and intensity of the conflict.

 

The MPC's clear commitment to stay proactive and pre-emptive in liquidity support provides comfort. Financial markets have responded more to global market volatility than what the real sector indicators have shown so far. The RBI has demonstrated its ability to tame excessive volatility using multiple instruments, ranging from open market operations to regulatory measures in the forex market. It has kept systemic liquidity in surplus till date despite volatile foreign capital flows.

(Ashutosh Pati)

 

VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET 

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The Reserve Bank of India's decision to hold rates and maintain its 'neutral' policy stance was broadly in line with expectations, as the economic outlook remains clouded by uncertainty. The two-week ceasefire in West Asia has eased tensions for now, but there are still upside risks to inflation and downside risks to growth.

 

Adding to the uncertainty are forecasts of a below-normal monsoon due to El Nino conditions, which could further weigh on agricultural output and price stability. Against this backdrop, we expect the RBI to extend its pause in the near term, awaiting greater clarity on both the geopolitical situation and monsoon performance before recalibrating its policy approach.  End

(Durgesh Nandan)

 

MIGUEL CHANCO, CHIEF EMERGING ASIA ECONOMIST, PANTHEON MACROECONOMICS

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The vote to keep the benchmark rate unchanged was unanimous, as seemingly was the decision to retain the RBI's official stance at "neutral", a small change from February when one of the six members was still calling for a shift to "accommodative". A lot has changed globally since the Monetary Policy Committee last met in early February, but much has also developed since this month's meeting started on Monday.

 

The Monetary Policy Committee called the war in West Asia an "unprecedented challenge for the global economy — higher prices and lower global growth", but the two-week ceasefire announced by the warring parties overnight should help minimise some of the "key downside risks" the members highlighted, including "further intensification of the conflict" and "its prolongation".

 

The committee remains broadly optimistic on the economy's growth prospects, while conceding at the same time that the global energy supply shock and disruptions to shipping routes would hit activity if sustained. Members shaded their calendar year Apr-Jun and Jul-Sept GDP growth forecasts only marginally to 6.8% and 6.7%, respectively, from 6.9% and 7.0%, while unveiling projections of 7.0% and 7.2% for Oct-Dec and Jan-Mar, respectively. This largely sounds reasonable to us, as the implied FY27 average is in sync with our own 6.9?ll for this fiscal year.

 

The committee is, rightly, not perturbed about the short-term outlook for inflation either, with the government's implicit pump-price fixes undoubtedly providing some sense of quiet comfort. For Apr-Jun, members still see inflation averaging at 4.0%, while they've raised their September quarter forecast slightly to 4.4% from 4.2%. Meanwhile, they unveiled projections of 5.2% and 4.7% for Oct-Dec and Jan-Mar 2027, respectively, which seem overly pessimistic from our point of view.

 

Overall, we continue to believe that the Monetary Policy Committee will hold the repo rate at 5.25% through to the end of our current forecast horizon to end-2027. It's very reassuring that the committee seems to want to avert a knee-jerk tightening of policy in the wake of the oil shock and also the resultant downward pressure on the rupee, saying emphatically in Wednesday's closing paragraph that "the economy is confronted with a supply shock" and that it is "prudent to wait and watch the changing circumstances and the evolving growth-inflation outlook".  

(Shubham Rana)

 

GARIMA KAPOOR, DEPUTY HEAD OF RESEARCH AND ECONOMIST, ELARA CAPITAL

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We do not see the Monetary Policy Committee hiking policy rates until CPI inflation durably surpasses 6% and inflation expectations get unhinged. We believe the 6.9% growth estimate put out by RBI for FY27 may need a reassessment as full pre-war energy export volumes might take 3–6 months due to backlog, diverted tankers, and partial infrastructure damage.

(Shruti Nair)

 

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FUND MANAGERS

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SANDEEP YADAV, HEAD OF FIXED INCOME, DSP MUTUAL FUND

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The RBI policy was as per expectation. It was not even mildly hawkish from any sense. The RBI continued its dovish call on liquidity. In fact, RBI's statement 'will continue to be proactive in liquidity management' ensures that policy remains soft rather than hard. For perspective, liquidity is so abundant that overnight rates are much lower than repo (rate). In fact, the RBI showed concerns on CP/CD (commercial paper/certificates of deposit) rates remaining elevated.

 

So, where is the risk of rate hikes? The RBI increased inflation expectation due to Iran war. But showed concerns for growth. The RBI put (FY27) CPI projection at 4.6% (with upside risks), but expressed concerns on (FY27) growth at 6.9% (with further downside risks) due to fuel supply constraints. But RBI also added the risk of financial market volatility to growth. That probably was not par for the course.
 
Moreover, the RBI expressed risk of Iran war becoming systemic when they said that 'initial supply shock may potentially become a demand shock'. Thus, the growth fears don't look transitory. On the other hand, core inflation projection is not high at 4.4%. In fact, the very mention of core inflation shows that RBI is willing to look through the transitory CPI rises due to agri & fuel shocks.

The Iran war will drive the RBI's future trajectory. But it will be a wrong conclusion that a long Iran war necessarily means higher rates. It could also mean lower growth, and thus lower rates. We believe it is too early to even talk about rate hikes. El Nino has found its space in Governor Speech. This should drive the conversations for next few months. However, India has strong buffers in cereals and the El Nino risks, while significant, are much lesser than in the past.
 
Today (Wednesday) yields have fallen 10-15 basis points across the curve. We maintain our view that money market segments will trend even further lower. The duration will remain at the whims of Mr. Trump and Iran war. But the latest ceasefire shows the risks are that yields should gravitate slightly lower due to lower expected (i) lesser inflation, (ii) fiscal expansion, and (iii) global financial markets turmoil. 

(Shumaila Firoz)

 

AMIT MODANI, SENIOR FUND MANAGER, LEAD – FIXED INCOME, SHRIRAM ASSET MANAGEMENT CO.

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The Reserve Bank of India's Monetary Policy Committee has unanimously voted to maintain the benchmark repo rate at 5.25%, upholding a 'neutral' stance to navigate heightened global uncertainty. This cautious approach is primarily driven by the ongoing conflict in West Asia and its subsequent disruption of global supply chains. While the domestic economy remains resilient, the RBI projects a slight moderation in growth, with FY27 GDP pegged at 6.9% compared to the 7.4% forecast for FY26. With inflation for FY27 estimated at 4.6%, the central bank is maintaining a vigilant, data-dependent watch on shifting growth-inflation dynamics. To ensure financial stability, the RBI remains committed to proactive liquidity management, aiming to keep the banking system in surplus and realign the shorter end of the yield curve. 

 

Looking ahead, we anticipate the RBI will maintain an extended pause as it monitors volatile crude prices and external risks that threaten the dual deficit. While markets have found temporary relief in recent ceasefire news, the underlying environment remains clouded by uncertainty, leaving domestic markets sensitive to core macro indicators and the upcoming monsoon. In this context, we recommend a defensive investment strategy centered on high-quality accrual strategies and the short end of the yield curve. This approach offers better risk-adjusted returns while providing the flexibility required for a tactical pivot once geopolitical tensions ease. By aligning with the central bank's "wait and watch" guidance, investors can ensure high liquidity within a volatile climate.  

(Shumailla Firoz) 

 

ABHISHEK BISEN, HEAD OF FIXED INCOME, KOTAK MAHINDRA ASSET MANAGEMENT CO.

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The RBI policy has been in line with expectations and the MPC unanimously decided to hold the policy repo rate at 5.25% and maintained the stance at neutral. Inflation for FY27 has been pegged at 4.6%, while growth for FY27 has been projected at 6.9%. The West Asia war poses downside risk to the GDP forecast, as well as upside risks to inflation.

 

RBI will continue to be proactive and pre-emptive to maintain ample liquidity.

 

The market seems to be pricing in significant rate hikes over the next 12-15 months. However, given the recent developments related to the two-week ceasefire in West Asia, we believe rate hikes priced in by the market are much higher than what is likely to be delivered.

 

Ten-yr Gsec yields have stayed flat post RBI policy, though it has fallen by 12 bps since Tuesday and is trading around 6.92% levels.

(Nandini Sinha)

 

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OTHERS

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VIKAS GUPTA, CHIEF EXECUTIVE OFFICER AND CHIEF INVESTMENT STRATEGIST, OMNISCIENCE CAPITAL

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Before the US-Iran-Israel war started, the expectation was that RBI would be biased towards rate cuts. With oil prices spiking close to $100, the chances of inflation increased and the INR depreciated significantly. Even with the ceasefire apparently in place, it is likely to be a very volatile situation in the near future. Under these circumstances, it was expected that the RBI would remain neutral and carefully watch the data and its impact on inflation, the INR, and forex reserves. If the war actually ceases before the next meeting, the RBI could focus more on growth and possibly cut rates.  

(Prateem Rohanekar)

 

End

 

Compiled by Mansi Patil

Filed by Tanima Banerjee

 

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