The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) opted to keep the repo rate unchanged at 5.25% during its meeting from April 6 to 8, 2023. This decision comes amid escalating conflicts in West Asia that have led to significant supply shocks globally. RBI Governor Sanjay Malhotra highlighted that while inflation is expected to rise, it is largely driven by supply chain disruptions, which are beyond the central bank's control. The MPC projected inflation to reach 4.6% in FY27, up from a benign 2.1% in FY26, indicating a notable increase due to these external shocks. Deputy Governor Poonam Gupta stressed the importance of supporting economic productivity during this uncertain period. The committee members agreed that a cautious approach is warranted, with many advocating for patience before making any policy changes. Economists suggest that the RBI may not initiate a rate hike cycle until 2027, unless supply shocks lead to persistent inflationary pressures. The MPC's decision reflects a broader strategy to navigate the complexities of supply-driven inflation without sacrificing economic growth.