India’s Finance Minister Nirmala Sitharaman has indicated that RBI may cut rates, even as global uncertainties continue to pose risks ahead of the upcoming Monetary Policy Committee (MPC) meeting.

Key Highlights

• RBI may consider rate cuts as Sitharaman flags global risks ahead of MPC meeting.
• Global uncertainty and geopolitical tensions expected to influence RBI monetary policy decisions and outlook.

Speaking ahead of the policy review, Nirmala Sitharaman suggested, "The central bank has policy flexibility to ease rates and extend targeted support to sectors under stress, depending on evolving economic conditions.

Nirmala Sitharaman highlighted rising global volatility, pointing to geopolitical tensions, particularly in West Asia, as a key concern for the global economy. She noted that such developments are creating uncertainty, complexity, and risks for global growth and energy markets, which could influence India’s policy decisions.

These external pressures are expected to play a crucial role in shaping the RBI’s monetary policy stance.

While signalling room for a potential rate cut, Sitharaman also emphasized the need for careful management of public borrowing and macroeconomic stability. The RBI is likely to balance growth support with inflation concerns and external risks.

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The central bank had last reduced the repo rate by 25 basis points to 5.25% in December 2025, following a series of rate cuts aimed at supporting economic growth. However, market expectations remain mixed, with many economists anticipating a status quo in the upcoming MPC meeting due to ongoing global uncertainties.

The remarks signal that while rate cuts remain a possibility, the RBI is expected to adopt a cautious and data-driven approach. The outcome of the MPC meeting will depend on inflation trends, growth outlook, and global developments.

India’s monetary policy trajectory will likely continue to focus on maintaining growth momentum while safeguarding macroeconomic stability in an increasingly volatile global environment.