The Reserve Bank of India is set to announce its interest rate decision this Friday, and right now the whole market feels like it’s groping in the dark—nobody can say for sure what’s coming next. DBS Bank economist Radhika Rao put it bluntly: the Indian central bank is stuck in the middle, caught in a dilemma.

If they cut rates, prices—which are already rising sharply—could soar even higher, making life harder for ordinary people. But if they don’t cut, the economy needs some stimulus, and both business investment and consumer spending are hoping for some monetary easing. It’s the classic “squeeze one side, something pops up on the other.”

DBS’s forecast is for a mild rate cut—on the condition that inflation in fiscal 2026 comes in below the central bank’s own expectations. Sounds reasonable, right? But here’s the problem: the rupee’s performance this week has been a rollercoaster, with wild swings that feel like a live grenade on the table—no one knows when it might go off. If the currency spirals out of control, it could trigger capital outflows and a spike in borrowing costs for businesses, throwing all prior plans into chaos.

People in the market are extremely nervous. They’re glued to the data, glued to the news, waiting for an outcome that feels like an exam with no answers. As for the central bank, they have to weigh things carefully: they can’t crush the economy just to tame inflation, but they also can’t let prices skyrocket in the name of growth. Striking that balance is incredibly tough.

There’s another detail: announcements about open market operations may not be released alongside the rate decision, but separately. These operations are essentially the central bank buying or selling bonds to adjust the amount of money in the market, directly affecting interest rates and liquidity. A separate announcement means the market will have to stay on high alert before and after the decision, worried about missing any signals.

Ultimately, this policy decision is a high-wire act. The central bank has to tread carefully, and market participants need to be ready to adjust their strategies at a moment’s notice. In an ever-changing macro environment like this, staying flexible is more important than anything—after all, no plan ever keeps up with reality.