Daijiworld Media Network - New Delhi

New Delhi, Apr 2: A report by Bank of Baroda has indicated that the Reserve Bank of India is expected to keep the policy repo rate unchanged at 5.25% during its April 2026 Monetary Policy Committee (MPC) meeting, citing rising global risks and economic uncertainty.

According to the report, the current rate-cutting phase has likely come to an end, with the central bank expected to adopt a prolonged pause while maintaining a neutral stance. It added that the RBI will closely monitor developments and may introduce targeted measures to support liquidity and stabilise the rupee if required.

A key concern highlighted is the impact of the ongoing tensions involving Iran and the United States, which have disrupted global energy supplies. The closure of the Strait of Hormuz has pushed crude oil prices above $100 per barrel, raising inflationary pressures worldwide.

The report noted that the full impact of the conflict on economic growth and inflation will become clearer over the next three to four months, after which the RBI may reassess its policy direction. It also warned that if inflation crosses the upper tolerance limit of 6%, a rate hike could be considered later in the year.

Financial markets have remained volatile amid the geopolitical tensions, with increased foreign portfolio investor (FPI) outflows putting pressure on India’s currency and bond markets. The Indian rupee has weakened significantly, touching a record low of 94.83 against the US dollar.

The broader economic outlook may also be revised. The report suggested that the RBI could rework its GDP growth and inflation projections for FY27 in light of global developments. Meanwhile, the Chief Economic Adviser has cautioned that India’s current account deficit is likely to widen considerably in FY27.

Despite these concerns, the bank has projected India’s GDP growth at 7.6% for FY26, with FY27 growth expected to moderate slightly to a range of 7–7.2%, reflecting resilience alongside emerging external challenges.