The Reserve Bank of India will hold its first monetary policy meeting of FY27 from April 6 to April 8. The meeting comes at a time when India is grappling with global uncertainties, including escalation in tension in the Middle East, crude prices surging and the rupee at all-time low.
Crude prices above $100 per barrel have led to a sharp spike in LPG prices. Supply disruptions in the Strait of Hormuz have added to the worries. Economists also expect all of this to impact India’s GDP growth.
All eyes are now on the RBI on how it will strike the balance between reining in inflation while supporting growth. The key question remains: will the RBI Monetary Policy Committee hike, cut or pause rate action?
Goldman Sachs expects RBI to hike repo rate
Goldman Sachs expects a 50 basis point hike in the policy repo rate to counter pressures from a depreciating Rupee.
It has cut India’s FY26 GDP growth forecast to 5.9%, from an earlier estimate of 7% before the Iran war. This is the second downgrade by Goldman Sachs since Middle East conflict escalated. It also sees risk of rate hike in upcoming April Policy meet by RBI on heightened inflation concerns.
Before this, Goldman Sachs had reduced the forecast to 6.5% in March 13. The fresh cut in growth estimate by Goldman’s analysts follows a change in their assumptions on oil prices and the period of disruption to supplies. Elevated crude prices are a key foreign exchange, inflation and fiscal risk for net energy importer India.
Goldman Sachs now sees inflation in India rising to 4.6% in 2026 from their earlier expectation of 3.9%.
ICRA expects RBI to pause
ICRA expects RBI MPC to pause on the policy rates through the fiscal year, despite the anticipated softening in the GDP growth. However, it expects the RBI to continue to intervene on the liquidity front during FY27.
ICRA estimates India’s GDP growth to moderate to 6.5% in FY27. “India’s GDP growth is expected to moderate to 6.5% in FY27 from the projected 7.5% in FY26, owing to the adverse impact of elevated energy prices and concerns around energy availability, even as developments around tariffs, lower GST rates, policy rate cuts, subdued food inflation, and upbeat farm sector trends augur well for consumption,” ICRA added.
RBI MPC meet: Rate decision, inflation outlook in focus
The bi-monthly meeting of the RBI’s Monetary Policy Committee (MPC) will look at keeping inflation within the target band of 2–6%. After the three-day meeting, RBI Governor Sanjay Malhotra will announce the policy repo rate and the central bank’s stance on inflation and growth.
The six-member rate-setting panel will convene six times during the fiscal year to review macroeconomic conditions and take key decisions on policy rates and liquidity measures.
In its previous meeting held from February 4–6, MPC unanimously decided to keep the policy repo rate unchanged at 5.25% while retaining a “neutral” policy stance.