The Reserve Bank of India (RBI) is set to announce its rate decision on April 8 along with other policy measures after three days of deliberations.

The bi-monthly Monetary Policy Committee (MPC) meeting began on April 6 and will conclude on April 8. All eyes are now on RBI Governor Sanjay Malhotra to see whether he will announce a rate cut, hike, or maintain the status quo on the repo rate—a decision that may be taken unanimously.

5 key factors to watch ahead of RBI MPC rate decision- 

There are several factors that the RBI need to watch out for. The Central Bank is expected to maintain the tricky balance between growth and inflation even as crude remains well above the $100/bbl mark and rupee is hovering 93/$

1) Middle East war that has damaged the energy infrastructure of major oil exporting economies.
2) Disruption of Strait of Hormuz resulting in supply chain disruption
3) Oil prices continue to hover above $ 1100/bbl
4) Deprecating Rupee- The rupee depreciated by Rs 3 in just 114 days
5) Highest foreign institutional investor (FII) outflows at at $16.6 billion

RBI MPC meet:  Bank of Baroda expects status quo

Economists at Bank of Baroda expect RBI to hold the repo rate this time and announce its full-year growth and inflation forecasts amid the ongoing Iran war and crude remaining at elevated levels.

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 “RBI will remain vigilant and hold rates steady for the time being, without changing its stance from neutral. We also believe this to be the end of the rate cut cycle,” Bank of Baroda noted.

However, Bank of Baroda warned of rise in inflation and hike in rates in future. “If oil prices remain above $ 100/bbl for a consistently long period of time and inflation breaches the upper tolerance band of RBI (6%), then there might be a chance of rate hike by the central bank towards the end of FY27,” Bank of Baroda said.

ICRA expects a pause and forecasts inflation spike

ICRA also expects the RBI MPC to maintain an extended pause on policy rates given the projected uptrend in CPI inflation and persistent upside risks.

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Assuming an average crude oil price of $85/bbl, with no pass-through to Retail Selling Prices (RSPs), ICRA pegs the WPI at 3.5% and the CPI at 4.3% in FY27, with risks tilted to the upside.

“Given the projected uptrend in CPI inflation, ICRA expects an extended pause on the policy rates throughout the fiscal in spite of the anticipated slowdown in growth, although the RBI would continue to intervene on the liquidity front,” ICRA noted.

RBI to maintain ‘status quo’: JM Financial

JM Financial expects “a status quo on policy rates along with proactive liquidity management measures.”  The analyst expects the RBI to moderate growth expectations to 6.5–6.8% and raise inflation expectations to 3.5–4% for FY27E. 

RBI MPC Meet: Date, time  & live details

RBI Governor Sanjay Malhotra will announce the first MPC decision for FY27 at 10 am tomorrow, April 8. The RBI’s policy announcement, followed by a press conference, will be telecast live on the RBI’s YouTube channel and social media handles, including X (formerly Twitter).

Financial Express: Financial Express will get you live coverage of policy announcement, its impact and economist comment on the same.