Ahead of the April 8 meeting of the Monetary Policy Committee, Finance Minister Nirmala Sitharaman signalled on Monday that the Reserve Bank of India has room to lower interest rates and extend targeted support to sectors facing stress, even as it navigates a challenging global environment.
"RBI to cut interest rate and has room to offer targeted support to affected sectors," the finance minister said while addressing the audience at a NIPFP event.
Also Read | FD rates set to rise? RBI repo decision may bring good news for investors
The RBI last reduced the repo rate on December 5, 2025, when the MPC cut it by 25 basis points - from 5.50% to 5.25%.
Moreover, speaking on the broader context, Sitharaman said public borrowing strategies would need to be “smart” in light of global headwinds. She pointed out that India’s growth vision under Viksit Bharat must contend with both external uncertainties and domestic variables such as the monsoon.
“The world economy is witnessing volatility, uncertainty, complexity and ambiguity,” she said.
Highlighting geopolitical risks, the two-time finance minister noted that the ongoing tensions in the Middle East have intensified into what she described as a “systemic tremor” with the potential to disrupt critical global energy supply chains.
Also Read | RBI MPC Meeting: India seen holding rates as 'Goldilocks' phase gives way to stress
"Middle East conflict evolved into systemic tremor threatening vital arteries of global energy," she said.
She added that the current year is turning more challenging due to the escalation of the conflict, which is contributing to broader regional security concerns.
Markets brace for RBI pause
Even as Sitharaman flagged room for easing, market participants are increasingly betting that the RBI may hold rates steady at the upcoming policy review as it assesses the fallout from the ongoing Iran conflict, which has unsettled currency and bond markets.
A majority of economists in a recent Reuters poll expect the central bank to keep the benchmark repo rate unchanged at 5.25%, signalling caution amid heightened global uncertainty.
The RBI has already delivered cumulative rate cuts of 125 basis points through 2025, before pausing in its February meeting.
At the time, RBI Governor Sanjay Malhotra had described the economy as being in a “Goldilocks” phase of strong growth and low inflation - a balance that now appears increasingly strained.
"RBI to cut interest rate and has room to offer targeted support to affected sectors," the finance minister said while addressing the audience at a NIPFP event.
Also Read | FD rates set to rise? RBI repo decision may bring good news for investors
The RBI last reduced the repo rate on December 5, 2025, when the MPC cut it by 25 basis points - from 5.50% to 5.25%.
Moreover, speaking on the broader context, Sitharaman said public borrowing strategies would need to be “smart” in light of global headwinds. She pointed out that India’s growth vision under Viksit Bharat must contend with both external uncertainties and domestic variables such as the monsoon.
“The world economy is witnessing volatility, uncertainty, complexity and ambiguity,” she said.
Highlighting geopolitical risks, the two-time finance minister noted that the ongoing tensions in the Middle East have intensified into what she described as a “systemic tremor” with the potential to disrupt critical global energy supply chains.
Also Read | RBI MPC Meeting: India seen holding rates as 'Goldilocks' phase gives way to stress
"Middle East conflict evolved into systemic tremor threatening vital arteries of global energy," she said.
She added that the current year is turning more challenging due to the escalation of the conflict, which is contributing to broader regional security concerns.
Markets brace for RBI pause
Even as Sitharaman flagged room for easing, market participants are increasingly betting that the RBI may hold rates steady at the upcoming policy review as it assesses the fallout from the ongoing Iran conflict, which has unsettled currency and bond markets.
A majority of economists in a recent Reuters poll expect the central bank to keep the benchmark repo rate unchanged at 5.25%, signalling caution amid heightened global uncertainty.
The RBI has already delivered cumulative rate cuts of 125 basis points through 2025, before pausing in its February meeting.
At the time, RBI Governor Sanjay Malhotra had described the economy as being in a “Goldilocks” phase of strong growth and low inflation - a balance that now appears increasingly strained.
