Economists, industry leaders support RBI's cautious stance as inflation risks persist

New Delhi [India], April 8 : Economists and industry leaders on Wednesday largely backed the Reserve Bank of India's decision to keep the repo rate unchanged at 5.25 per cent, saying the central bank's cautious approach is appropriate amid global uncertainties and rising energy prices.

Experts said the move reflects a balancing act between controlling inflation and sustaining economic growth.

Dipti Deshpande, Principal Economist at Crisil Ltd, said the RBI's decision to maintain the policy repo rate was "along expected lines," noting that uncertainties arising from the West Asia conflict require policy prudence.

She added that the impact of the conflict on growth and inflation remains uncertain, and policymakers need to "stay nimble to act as the situation evolves."

Radhika Rao, Senior Economist at DBS Bank, said the policy outlook has shifted to a "more cautious balancing act" as the central bank manages renewed inflation pressures while supporting growth.

She noted that risks from oil prices and geopolitical tensions limit the scope for near-term rate cuts.

Gaurav Kapur, Chief Economist at IndusInd Bank, said the status quo on rates and the continuation of the neutral stance were "along expected lines."

He added that while inflation risks remain on the upside, domestic economic momentum continues to provide resilience.

Industry representatives also pointed to the impact of geopolitical tensions on trade and supply chains.

Ratul Puri, Chairman of Hindustan Power, said the RBI is likely to assess the effect of the West Asia conflict on growth and inflation before taking further steps on interest rates.

He noted that disruptions in energy supply chains and higher freight and insurance costs could influence inflation in the coming months.

Engineering exporters also flagged concerns about global trade. Pankaj Chadha, Chairman of EEPC India, said geopolitical tensions could significantly dent global trade, adding that "high energy prices are likely to slow down growth in major parts of the world."

Jyoti Prakash Gadia, Managing Director of Resurgent India Limited, said the RBI has adopted a "wait-and-watch approach" amid supply chain disruptions and rising energy prices.

He added that ensuring adequate liquidity in the financial system is important to support productive sectors during uncertain times.

Dr DK Srivastava, Chief Policy Advisor at EY India, said the RBI's policy review highlights the impact of the West Asia crisis on India's growth and inflation outlook.

He noted that the central bank has projected real GDP growth at about 6.9 per cent and inflation around 4.5 per cent for 2026-27.

However, he cautioned that higher crude prices could affect these projections.

"If crude averages around $95 per barrel, growth could fall to about 6.7 per cent while inflation may rise to nearly 5 per cent," he said, adding that the RBI has "appropriately chosen to hold the repo rate and wait for a clearer assessment of crude price movements."

Industry experts said the central bank's cautious stance signals readiness to respond if inflationary pressures intensify, while ensuring that economic growth remains on track.

RBI has kept the policy repo rate unchanged at 5.25 per cent in the first monetary policy announcement of the financial year 2026-27, citing rising global uncertainties and geopolitical tensions.

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