By:-Ajitabh Bharti, Co-founder and Executive Director, CapitalXB
“The RBI’s current stance of keeping the policy rate on hold appears well balanced. Given the supply-side measures undertaken primarily by the Government of India, inflation seems to be under control, and this provides the RBI with significant headroom to maintain a neutral stance and keep rates unchanged. I expect this approach to continue in the near term.
While the ongoing US-Iran war continues to cast a shadow over the global inflation outlook, the RBI is likely to remain focused on supporting growth while monitoring inflation carefully. At this stage, inflation appears more likely to be managed through supply-side interventions than through monetary tightening.
Another supportive factor is the healthy outlook for FCNR inflows, which is helping reduce panic in the foreign exchange markets. This, in turn, is contributing to a more orderly currency environment. The rupee depreciation has also remained gradual, which suggests that external pressures are being managed without creating undue volatility.
Overall, the RBI’s policy response reflects a prudent balance between growth and inflation management. In my view, maintaining the current stance is appropriate, as it allows the central bank to preserve stability while remaining alert to global risks.”