ASSOCHAM Urges RBI to Maintain Rates as India Strengthens Its Ability to Tackle Retail Inflation
According to a recent analysis by industry lobby ASSOCHAM, India is positioned favorably to manage retail inflation compared to other major economies, despite ongoing disruptions from the West Asia conflict. The analysis highlights India’s current inflation rates, which stood at 3.2% in February 2026 and increased to 3.5% by April 2026. In contrast, inflation in the US saw a significant hike from 2.4% to 3.8% during the same period. ASSOCHAM has recommended that the Reserve Bank of India (RBI) maintain the current repo rate while also implementing liquidity and support measures for export-driven and energy-intensive MSMEs in the upcoming monetary policy review scheduled for early June 2026.
The stability of retail inflation at relatively low levels in India provides a conducive environment for consumers and businesses alike. A sustained status quo on the repo rate is likely to maintain favorable borrowing conditions, encouraging investment and consumption. This is particularly crucial for export-oriented sectors and MSMEs, which are currently facing heightened pressures due to rising energy prices and geopolitical tensions. Consequently, consumers may experience more stable prices, while businesses can better navigate through these uncertain economic waters without the additional burden of increased borrowing costs.
Looking ahead, the government and the RBI’s focus on maintaining a stable monetary policy response is pivotal for bolstering business sentiment and encouraging demand. The anticipated $5 billion USD/INR buy-sell swap auction aimed at injecting long-term liquidity into the banking system signifies proactive measures to stabilize the rupee amid global contagions and oil price fluctuations. With these steps, the RBI aims to ensure that inflation remains manageable and conducive to economic growth, with the hope that any recent inflationary pressures are indeed transitory. Continuous monitoring of inflation trends will be essential as the country moves forward into the latter half of 2026.