MUMBAI—The Reserve Bank of India (RBI) is widely expected to hold interest rates steady at its upcoming policy meeting, as policymakers grapple with soaring oil prices and a weakening rupee, according to analysts and sources familiar with the matter.
The central bank’s Monetary Policy Committee (MPC) is likely to maintain the repo rate at 6.50% for the fourth consecutive meeting, prioritizing inflation control over growth stimulus. India imports over 80% of its crude oil needs, making it particularly vulnerable to global price shocks.
‘Given the current macroeconomic environment, the RBI has little room for maneuver,’ said a Mumbai-based economist at a global bank who requested anonymity. ‘Food inflation remains stubbornly high, and the rupee’s depreciation adds imported inflation pressures.’
The Indian rupee has fallen nearly 10% against the U.S. dollar this year, hitting record lows. Meanwhile, Brent crude prices have surged above $90 per barrel due to Middle East tensions and OPEC+ supply cuts.
Some analysts suggest the RBI may intervene more aggressively in currency markets while maintaining its hawkish monetary stance. The central bank has already drawn down $70 billion from its foreign exchange reserves since Russia’s invasion of Ukraine to defend the rupee.
Market participants will scrutinize the RBI’s guidance for any signals about future policy direction, particularly whether it maintains its ‘withdrawal of accommodation’ stance amid slowing GDP growth.