RBI’s Monetary Policy Review

On Apr 08, 2026, RBI’s Monetary Policy Committee (MPC) took following policy decisions:

The RBI’s MPC voted unanimously to keep the repo rate unchanged at 5.25%. The MPC also decided to continue with the neutral monetary policy stance .

Executive summary of RBI’s press releases/ press conference:

Global Economy:

• Global growth is facing increasing downside risks . A sharp rise in energy prices and input shortages is adding to inflation pressure.
• Safe-haven flows are pressuring major currencies, while the US dollar has strengthened.
• Commodity prices, including metals and gold, have eased, but markets remain volatile.
• Equity markets have seen a broad-based correction.
• Sovereign bond yields have moved higher across major economies on inflation and fiscal concerns.

Domestic Growth:

• Elevated energy and commodity prices may weigh on economic growth in FY27.
• Supply disruptions could hurt input availability, though the government is working to protect critical supply chains.
• Healthy balance sheets of financial institutions and corporates should keep supporting economic activity.
• Rural demand remains robust and could improve further with better farm conditions and a healthy labor market.
• Urban consumption should strengthen, helped by GST rationalization and strong services activity.
• Real GDP growth for FY27 is projected at 6.9%.

Source : RBI

Domestic Inflation:

• Recent spikes in energy prices from the West Asia conflict are a key inflation risk.
• Petrol and diesel retail prices have not changed so far, but higher global energy prices have started feeding into some other fuel items.
• Food inflation looks comfortable in the near term, supported by strong rabi output, adequate reservoir levels, and comfortable foodgrain stocks.
• The possible emergence of El Niño is a risk to watch for upcoming monsoon season.
• CPI inflation for FY27 is projected at 4.6%. Core inflation (ex food and fuel) is projected at 4.4% for FY27.
• Inflation risks are tilted to the upside.

Liquidity Conditions:

• Credit market transmission remained satisfactory.
• The RBI used both durable and temporary liquidity measures to keep banking system liquidity adequate.
• Going forward, the RBI said it will stay proactive and pre emptive in liquidity management.
• RBI’ s aim is to ensure enough liquidity in the banking system to support productive economic activity.

Fixed Income Outlook:

• Given the uncertain environment, RBI delivered a balanced monetary policy by being cautious on the rising risk to both inflation and growth outlook.
• At the current juncture, we are not expecting any rate action . We believe that RBI is expected to remain on a pause in FY27.
• On the liquidity front, from a longer-term perspective, we continue to see space for further OMO (open market operation) purchases from RBI in FY27 to provide durable liquidity to the banking system.
• We expect India’s 10yr G-sec yield to trade in a range of 6.95 7.10% in the near-term. If the ceasefire holds, we anticipate a range of 6.7–7% emerging for the bond yield over the coming weeks .

Domestic Inflation:

• Recent spikes in energy prices from the West Asia conflict are a key inflation risk.
• Petrol and diesel retail prices have not changed so far, but higher global energy prices have started feeding into some other fuel items.
• Food inflation looks comfortable in the near term, supported by strong rabi output, adequate reservoir levels, and comfortable foodgrain stocks.
• The possible emergence of El Niño is a risk to watch for upcoming monsoon season.
• CPI inflation for FY27 is projected at 4.6%. Core inflation (ex food and fuel) is projected at 4.4% for FY27.
• Inflation risks are tilted to the upside .

Source : RBI