RBI Likely To Hold Rates As Inflation & External Risks Rise Amid West Asia Crisis: SBI Research

ENA Economy 2026-04-06 14:59:04 New Delhi, Apr 6 (KNN) The Reserve Bank of India (RBI) is expected to keep key policy rates unchanged in its upcoming Monetary Policy Committee (MPC) meeting scheduled for April 6 8, according to a report by SBI Research. The report cited heightened global uncertainty due to the ongoing West Asia conflict, adding that as the situation is still evolving, we expect the RBI to maintain the status quo in the upcoming policy, which will be the first review since the escalation of tensions, reported ANI. SBI Research highlighted significant disruptions in global energy markets, particularly due to the effective closure of the Strait of Hormuz, which has led to a sharp spike in crude oil prices. The rupee has weakened past 93 against the US dollar, while crude prices remain above USD 100 per barrel, increasing imported inflation risks. It also warned that inflationary pressures could intensify further, especially if adverse weather conditions such as a potential El Niño materialise. Inflation and External Risks on Radar Imported inflation is already estimated at around 5.4 per cent and is expected to rise further. The report indicated that consumer price inflation could exceed 4.5 per cent over the next three quarters. External sector risks are also mounting, with foreign institutional investor (FII) outflows in FY2026 reaching USD 16.6 billion—the highest since 1991. The balance of payments is projected to remain in deficit in FY2027, adding pressure on the currency. Focus on Liquidity, Not Just Rates Given the volatile environment, the RBI is expected to adopt a cautious stance in its policy communication. SBI Research suggested that the central bank may prioritise liquidity management and market stability over immediate rate changes. Measures such as Operation Twist could be considered to manage bond yields, while recent steps to curb speculative currency positions may pose operational challenges for banks. The report concluded that while growth concerns persist, the current mix of geopolitical tensions, currency volatility, and rising inflation justifies a pause in policy rates. It added that the RBI is likely to proceed carefully, balancing inflation control with financial stability in an uncertain global environment. (KNN Bureau) 45692 https://knnindia.co.in/news/newsdetails/economy/rbi-likely-to-hold-rates-as-inflation-external-risks-rise-amid-west-asia-crisis-sbi-research 2026-04-06 14:59:04 knnindia.co.in RBI Likely To Hold Rates As Inflation & External Risks Rise Amid West Asia Crisis: SBI Research