Repo rate to be hiked? RBI MPC member says...

In a recent interview, Saugata Bhattacharya, an external member of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), indicated that the likelihood of a repo rate hike is currently minimal, despite existing inflationary pressures stemming from geopolitical tensions. The MPC, which voted unanimously to maintain the repo rate at 5.25%, has adopted a neutral policy stance to keep interest rates low for the foreseeable future. Bhattacharya noted that while factors such as rising metal prices and crude oil costs could influence consumer price inflation (CPI), there are no immediate signs of economic overheating, even after various stimulus measures. The RBI has significantly reduced rates over the past year, and he anticipates CPI to approach the 4% target in the first half of FY27 due to base effects and precious metal price fluctuations. Moreover, credit growth is showing positive momentum, particularly in non-retail sectors and among large corporates, which suggests an improving economic environment driven by robust domestic consumption. Bhattacharya emphasized that the effects of fiscal and monetary stimuli are still unfolding, with signs of increased private investment and a revival in foreign direct investment (FDI). The ongoing developments in global trade, particularly regarding tariffs, are also being closely monitored as they could impact market dynamics.