Citi: The Reserve Bank of India is expected to hold rates steady and also lower GDP forecasts

Glonghui, April 7 — Citi Research stated in a report that due to the Middle East conflict, the Reserve Bank of India may lower its GDP growth forecast for the 2026/27 fiscal year and raise its inflation forecast. However, Citi said that given that the inflation trajectory is under control and growth remains uncertain, the Reserve Bank of India is likely to keep the policy repo rate unchanged on Wednesday. Citi pointed out that, unlike at the start of the Russia-Ukraine conflict, both headline and core inflation now have a very favorable starting point. According to Citi's calculations, even if prices rise sharply due to oil price shocks, there is almost no threat to the Reserve Bank of India’s 6% upper limit for inflation. In addition, the 5.25% repo rate is not as low as the effective 3.35% rate during the early stages of the Russia-Ukraine conflict.