RBI rate-setting panel starts deliberations amid West Asia crisis; decision on Wednesday

The Reserve Bank's rate-setting panel on Monday (April 6, 2026) started its three-day brainstorming session on the first bi-monthly monetary policy of the fiscal year amid expectations of a status quo on the benchmark lending rate in view of apprehensions of a spike in inflation due to ongoing West Asia crisis.

The decision of the six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Sanjay Malhotra, will be announced on Wednesday (April 8, 2026).

The RBI has cut rates by a total of 125 basis points since February 2025, marking its most aggressive easing cycle since 2019. It last reduced the rate by 25 basis points in December and maintained status in its last meeting in February.

According to experts, the MPC members will take into account the continuing geopolitical tensions in West Asia, volatility in commodity prices and sharp currency movement hitting the value of the domestic currency.

They noted that while retail inflation has moved closer to the RBI's medium-term target of 4%, the recent surge in global crude oil prices has raised concerns about potential second-round effects on domestic prices, particularly fuel, transportation, and core inflation components.

As per estimates, every $10 increase in crude prices per barrel stokes inflation by up to 0. 60%. Crude prices, which were in the $60 per barrel vicinity for a long time, have hardened to over $100 since the start of the conflict in late February.

Additionally, the rupee has depreciated by over 4% since the war, which has consequences for pushing up import inflation.

Experts are also of the view that the central bank will retain its current policy neutral stance in the upcoming review, reflecting a preference to maintain flexibility amid evolving inflation dynamics and global uncertainties.