Why is RBI holding rates despite pressure?

The Reserve Bank’s Monetary Policy Committee kept the repo rate unchanged at 5.25% on April 8, 2026, balancing inflation risks against slowing growth. Brent crude remains above $110 per barrel due to Middle East tensions. The rupee, near 94 per dollar, adds further strain, making imported inflation a serious concern.

Inflation is forcing the RBI to pause any easing even though growth needs a push. India’s GDP outlook for FY27 has slipped to nearly 6.3%, as higher fuel costs and supply disruptions bite. The government bond yield has hovered around 6.65%, signalling that investors expect monetary policy to stay cautious for months.

Markets are jittery. FIIs have withdrawn over ₹1.1 lakh crore so far this year, pulling heavily from financial stocks. Equity volatility may rise ahead of Q4 FY26 results, beginning with TCS on April 9. For savers, current deposit and debt fund yields hold steady, so investing through SIPs and diversifying across asset classes remains the wiser approach now.