The Reserve Bank of India’s latest monetary policy decision has broadly aligned with market expectations, with economists indicating limited room for further rate reductions amid emerging inflationary risks. Reacting to the policy announcement, Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, said the Monetary Policy Committee (MPC) delivered decisions “completely in line with expectations” in terms of both the policy rate and overall stance.
Bhardwaj noted that the inflation outlook for the first half of FY27 has been revised marginally upward, reflecting concerns over external price pressures and currency movements. She highlighted that uncertainty persists regarding growth and inflation projections as markets await the release of the new statistical series, which could reshape macroeconomic assessments.
According to her, the recent uptick in global commodity prices combined with a relatively weaker currency may create upside risks to inflation, potentially constraining the central bank’s ability to ease rates further. “We therefore see limited room for additional easing on repo rate front, with RBI’s focus expected to be on ensuring stability on the liquidity front in the year ahead,” Bhardwaj said.