If crude oil crosses $90, your EMI and loan may become expensive, warns UBI report

A recent report by Union Bank of India says that if crude oil prices remain above $ 90 per barrel, there may be a possibility of increase in interest rates due to increasing inflationary pressure. This means that your EMI or loan may prove costly. Although at present the stance of stability (pause) regarding interest rates is expected to continue for a long period, but the direction of inflation and global commodity prices may change this trend.

Constant monitoring of inflation trends

According to the report, at this time banks are sticking to their expectations of stability in interest rates and are continuously keeping an eye on inflation trends. But if crude oil prices remain above $90 per barrel, the possibility of a rate hike cannot be ruled out. Regarding the financial year 2026-27 (FY27), the report has estimated that consumer price index (CPI) based inflation may increase rapidly and remain above the level of 4.5 percent. High input costs and global uncertainties have been cited as the main reasons behind this.

Repo rate stable at 5.25 percent

Meanwhile, the Reserve Bank of India kept the repo rate steady at 5.25 per cent during the first meeting of FY27 in the monetary policy review released on April 8. The central bank cited global uncertainties and geopolitical tensions as the important reasons behind this decision. The report also said that signs of a rise in Wholesale Price Index (WPI) based inflation are already visible. WPI inflation stood at 0.70 percent in FY26, while it is expected to be above 5 percent in FY27.

Wholesale inflation rises in March 2026

On a monthly basis, wholesale inflation increased to 3.88 percent in March 2026, which was 2.13 percent in February and 2.25 percent in the same month last year. The main reason for this surge was the sharp increase in fuel prices. Fuel inflation, which was -3.64 percent last month, increased to 6.24 percent and was higher than expected. However, food inflation remained relatively under control and remained stable at 1.86 per cent on an annual basis, led by softening vegetable prices. At the same time, core inflation also increased to 4.31 percent, which was 3.91 percent last month.

There may be pressure on inflation in the coming months

The report warned that global developments such as the US-Iran conflict and rising commodity prices, including crude oil, could put further pressure on inflation in the coming months. Going forward, the bank has said that it will be necessary to keep a close eye on the global geopolitical situation, input costs, crude oil prices and overall commodity trends, as these factors will determine the future direction of inflation and monetary policy decisions.