- RBI faces challenges ahead of April policy due to US-Iran war's economic impact
- HDFC Bank expects RBI to raise inflation estimates amid global supply disruptions
- RBI likely to keep policy repo rate steady at 5.25% on April 8, per HDFC economist
Ahead of the April monetary policy verdict, the Reserve Bank of India finds itself in an 'extremely tough spot' amid the US-Iran war-led impact, according to Sakshi Gupta, Principal Economist, HDFC Bank. In an exclusive interview with NDTV Profit on Tuesday, April 7, Gupta said that the bank expects an upward revision in India's inflation estimates by the RBI due to the global supply disruptions caused by the Middle East geopolitical conflict. The central bank will unveil its first interest rate verdict and monetary policy stance for the new fiscal 2026-27 (FY27) on Wednesday, April 8 at 10:00 am.
ALSO READ: RBI Monetary Policy Preview: Status Quo Likely As Oil Price Shock Lifts Inflation Risks
RBI's rate-setting panel, chairmed by RBI Governor Sanjay Malhotra, is widely expected to keep its policy repo rate unchanged at 5.25%. HDFC Bank's Gupta also told NDTV Profit that the RBI is not in a position to change its policy stance considering the global triggers and the impact on the economy from the Middle East tensions. ''It is too premature for the RBI to look at changing the stance. We expect no change in interest rates by the RBI MPC on April 8,'' Gupta said. Central bank policymakers will weigh the rising external risks, a gradual firming in inflation rates, and signs of moderation in economic activity.
Impact on inflation, rupee
Coming to the macro factors, the HDFC Bank economist believes the March inflation rate could likely hit 4% as a direct result of the oil price shock amid the Iran war. ''There has been some impact on production,'' she said, highlighting the impact on India's manufacturing sector growth. Coming to rupee's volatility, Gupta believes the domestic currency has witnessed some 'stability' in the past few sessions due to RBI's forex intervention, however, 'the underlying pressure on rupee could return' amid the current scenario.
ALSO READ: RBI MPC Preview: Economists See Rates On Hold As Iran War Stokes Inflation Fears
Economists expect the RBI to focus on maintaining liquidity and ensuring orderly market conditions rather than adjusting rates in the near term. The April policy will also mark the central bank's first full set of projections for FY27 after it deferred the annual forecasts in February due to the transition to new consumer price index (CPI) and gross domestic product (GDP) series.
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