RBI governor to announce interest rate decision on Friday

Mumbai (PTI): Reserve Bank Governor Sanjay Malhotra on Friday will announce the decision of the Monetary Policy Committee (MPC) amid expectations that the key interest rate will be left unchanged at 5.25 per cent, as the central bank adopts a cautious approach in view of the West Asia conflict posing challenges for inflation as well as economic growth.

The six-member MPC started its three-day deliberations on Wednesday.

A PTI poll of economists and treasury heads showed that the Reserve Bank of India (RBI) is likely to keep the benchmark repo rate unchanged this time. Most of the respondents expect the central bank to resume policy tightening later in FY27 amid mounting inflation risks.

Of the respondents surveyed, 11 expect the MPC to maintain the status quo on rates, while four foresee a 0.25 per cent hike.

Most participants expect at least two rate hikes during the fiscal year, while some anticipate more than two increases if inflationary pressures intensify.

Addressing an event on Wednesday, State Bank of India Chairman C S Setty said the economic growth process will stabilise if the RBI opts for a status quo in policy rates amid inflation challenges.

He said market expectations broadly point towards a pause in rates.

Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, too, expects the MPC to keep policy rates unchanged.

"A stable interest rate environment is particularly important for the real estate sector, where affordability and buyer sentiment remain closely linked to borrowing costs. Continued rate stability would support housing demand, sustain momentum in residential sales, and encourage investment across the broader real estate ecosystem," Baijal added.

The central government has tasked the RBI to ensure that consumer price index (CPI) based retail inflation stays at 4 per cent (+,- 2 per cent).

Chaired by Malhotra, other MPC members are Nagesh Kumar, (Director and Chief Executive, ISID), Saugata Bhattacharya (Economist), Ram Singh, (Director, Delhi School of Economics), Poonam Gupta (Deputy Governor, RBI), and Indranil Bhattacharyya (Executive Director, RBI).