Societe Generale’s Kunal Kundu expects the Reserve Bank of India (RBI) Monetary Policy Committee to keep the repo rate at 5.25% with a neutral stance, focusing on stability after recent Oil and FX shocks. Kundu highlights a favourable inflation and growth mix, a much higher real policy rate than in 2022, and a Federal Reserve (Fed) on hold, which should be less negative for emerging‑market FX.

RBI focus on stability and real rates

"We expect the RBI Monetary Policy Committee (MPC) to hold the repo rate at 5.25% with a neutral stance, prioritising stability amid the oil‑and‑Fx shock."

"Currently, the inflation/growth mix is still quite favourable, especially when we consider the previous war episode – the Russia Ukraine War."

"With a relatively benign inflation reading (Feb’26 CPI at 3.2% yoy), India’s real policy rate now is 2.04% as against -2.07% back in 2022, when inflation was shooting through the roof."

"Also, Fed is on hold (3.50–3.75%) and we do not expect any rate cuts this year."

"This will likely be less hostile to EM Fx now than 2022’s rapid Fed hikes (total of 11 times starting in March 2022)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)