The Indian central bank maintains its rates in the economic uncertainties related to the Iranian conflict.

The Reserve Bank of India (RBI) kept its main policy rate unchanged on Wednesday, awaiting more concrete evidence of the impact of the war in Iran on the economy of the South Asian nation.

COMMENTS:

SUVODEEP RAKSHIT, CHIEF ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI “We continue to foresee a status quo by the RBI. It is closely monitoring food prices during the monsoon, given the risk of El Niño, as well as the extent of the impact of commodity prices and second-round effects.”

SUJIT KUMAR, CHIEF ECONOMIST, NATIONAL BANK FOR FINANCING INFRASTRUCTURE AND DEVELOPMENT, MUMBAI “The RBI’s macroeconomic outlook signals a GDP growth slowdown to 6.9% for the 2027 fiscal year… while CPI inflation is expected to rise to 4.6%. This evaluation effectively ends the monetary easing cycle.” “The Governor’s assurance of maintaining sufficient liquidity should reassure market participants, especially as ceasefire announcements ease short-term selling pressure on the rupee.”

KUNAL KUNDU, ECONOMIST INDIA, GENERAL SOCIETY, BENGALURU “In a context where the central bank must balance a still robust domestic demand and an external supply shock, keeping rates unchanged is the most robust way to preserve its options, avoid excessive reactions to short-term volatile price impulses, and strengthen the credibility of a data-dependent reaction function.”

ANUJ PURI, PRESIDENT, ANAROCK GROUP, MUMBAI “Maintaining rates ensures stability for current and future home loan borrowers. Monthly installments will remain unchanged, facilitating financial planning. This is excellent news for buyers, who can now move forward with more confidence.”

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI “We do not foresee a rate hike by the monetary policy committee until CPI inflation consistently exceeds 6% and inflation expectations are anchored.” “We believe the RBI’s growth estimate of 6.9% for the 2027 fiscal year may need reassessment, as a return to pre-war energy export volumes could take three to six months due to accumulated delays, oil tanker rerouting, and partial infrastructure damage.”

SACHCHIDANAND SHUKLA, CHIEF ECONOMIST OF THE GROUP, LARSEN & TOUBRO, MUMBAI “The RBI’s actions and posture will certainly be helpful but may prove insufficient in the face of supply disruptions, tariff uncertainties, and looming AI-related fears in the background.”

RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE “The RBI’s monetary policy outlook has shifted from a scenario of moderate inflation and strong growth to a more cautious balancing act.” “A neutral stance also allows for agility in policy adjustments in case the war lasts longer than expected. The central bank’s comments on inflation indicate a fear that a prolonged supply shock may turn into a demand shock. This suggests that second-round effects should materialize before rate hikes become a realistic option.”

SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI GROUP, MUMBAI “The RBI is expected to maintain its data-dependent approach, signaling an extended pause on rates.” “The overall policy guidance should also remain neutral, although liquidity conditions may continue to be managed in an accommodative manner. Overall, this policy mix seems neutral, slightly favorable for equities, interest rate products, and the foreign exchange market.”

VIKRAM CHHABRA, SENIOR ECONOMIST, 360 ONE ASSET, MUMBAI “Economic outlook remains clouded by uncertainty.” “The two-week ceasefire in the Middle East has eased tensions for now, but risks to inflation and growth continue to weigh on the economy. El Niño adds pressure, threatening a weak monsoon and rising food prices.” “As long as war and supply challenges are unresolved, the RBI is expected to stay on hold until a clearer picture emerges.”

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI “As expected, the RBI kept its rates and stance unchanged.” “After circulars limiting offshore speculative activity, the recent de-escalation on the geopolitical front has brought some relief to the Indian rupee, giving the RBI the necessary room to assess the lasting impact on growth and inflation.” “We anticipate the RBI will now strictly be data-dependent given the fluidity of the situation. Additionally, we expect it to closely monitor liquidity conditions.”