RBI’s Monetary Policy Committee said a longer West Asia conflict could meaningfully affect India’s growth and inflation, even as the economy stays resilient. Instead of changing policy, it chose a wait-and-watch approach, citing heightened geopolitical uncertainty and a possible El Nino-driven inflation risk.
In its MPC minutes, the Reserve Bank of India warned that the West Asia conflict and disruptions around the Strait of Hormuz are likely to pressure India’s growth while pushing inflation higher. By stressing global supply chains, the crisis can lift energy prices and weaken external demand, making it harder for policymakers to balance rate and inflation objectives.
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