RBI MPC Minutes Highlight Oil-Linked Inflation Risks, Rates Held At 5.25%

The Reserve Bank of India's Monetary Policy Committee maintained the repo rate at 5.25%, which is the same rate for the past two meetings held in April; this decision was made due to the high crude oil prices that are associated with the Iran situation, according to the meeting minutes released on April 23rd.

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The rate-setting panel retained its neutral stance during the April 6–8 meeting, even as global crude prices rose sharply following geopolitical tensions in West Asia.

Oil Price Surge Drives Policy Caution

According to the MPC minutes, crude oil prices have increased nearly 40% since the onset of the Iran conflict on February 28. Benchmark Brent crude touched $119 per barrel during this period before moderating.

The minutes noted that supply disruptions and constrained flows through the Strait of Hormuz, a critical global energy route, have added to uncertainty in global markets.

The committee said that the conflict's intensity and length, as well as damage to energy infrastructure, could hurt both growth and inflation.

Rate Action Dependent On Inflation Spillover

The MPC indicated that a rate hike would be considered only if elevated crude prices translate into broader inflationary pressures and affect domestic economic activity.

Indranil Bhattacharya, an external member of the MPC, said the macroeconomic impact would depend on the duration and scale of the conflict, as well as the pace of normalisation in global supply chains.

Previous Rate Cuts And Policy Context

In 2025, the central bank had reduced the repo rate by a cumulative 125 basis points during a period described as favourable for growth and inflation.

Despite those earlier cuts, the committee has maintained a pause in recent meetings amid rising global uncertainties.

Growth And Inflation Projections

The GDP growth rate forecast for the financial year 2027 has been revised to 6.9%, compared to the previous forecast of 7.6%. The inflation forecast stands at an average of 4.6%, which is within the central bank’s target range of 4% ± 2%.

According to the minutes, even though the Indian economy is stable, international events, especially those involving the energy sector, affect monetary policy considerations.