HOME > MARKETS > ECONOMY NEWS
  ECONOMY NEWS
ECONOMY
RBI likely to avoid immediate monetary policy tightening despite mounting inflation risks: Icra
May-26-2026

Rating agency Icra has said that the Reserve Bank of India (RBI) may hold off on tightening monetary policy for now despite mounting inflation risks from higher fuel prices and monsoon uncertainty. A rate hike is possible only towards the end of the year if price pressures persist.

Aditi Nayar, Chief Economist at Icra, said ‘We don't think that the MPC (monetary policy committee) will go in for a rate hike very soon. This is a supply shock. It is very different from the Covid shock, which was a simultaneous supply and demand shock.’ Nayar stated the RBI is likely to wait for clearer evidence of second-round inflationary effects before acting. 

The rating agency has increased its FY27 consumer price inflation (CPI) projection to 5 per cent, following recent retail fuel price increases, taking inflation above the RBI's medium-term target. However, the agency expects the MPC to remain on hold through the next two policy reviews, with a possible stance shift in October and a rate hike in December policy if necessary.


  RELATED NEWS >>