The RBI's repo rate stands at 5.25%, down from 6.5% through cuts made in 2025. On April 8, the Monetary Policy Committee will announce its next move—one that will ripple across home loans, currency markets, and India's economic trajectory.
The rupee has become the immediate pressure point. It hit a record low of ₹93.94/USD in March, weakening 3.6% year-to-date. Crude oil has climbed to $100/barrel, adding fuel to inflation concerns and forcing the RBI's hand.
RBI Governor Sanjay Malhotra faces a three-way bind: defend the rupee against further depreciation, keep inflation in check, and support an economy that is showing signs of slowdown. These objectives are pulling in opposite directions. A rate hike defends the currency but raises EMIs for millions of home loan borrowers. A rate cut or pause supports growth but may allow the rupee to weaken further.
The Iran conflict has shifted the macro playbook, introducing fresh geopolitical risk into commodity prices and capital flows. Economists remain divided on the best course: some argue for a pause to let earlier cuts work through the economy; others say a hike is necessary to anchor the rupee and prevent further FX stress into FY27.
