RBI Flags Inflation Risk, Keeps Policy Cautious Amid West Asia Conflict
New Delhi, Apr 21 (BNP): The Reserve Bank of India (RBI) is adopting a cautious, data-driven approach to interest rates amid global uncertainty triggered by the West Asia conflict, Governor Sanjay Malhotra said.
He noted that the region is important for India’s economy, accounting for major shares of crude oil imports, exports, fertilisers, and remittances, making the impact of disruptions significant.
Malhotra warned that prolonged supply shocks could lead to second-round inflation effects, where temporary price rises become more persistent in the economy.
He said the RBI remains in a “wait-and-watch mode”, with the Monetary Policy Committee maintaining a neutral stance and not committing to any specific rate path.
On the currency, he said the RBI intervenes to reduce volatility but does not target a fixed exchange rate. He also highlighted India’s strong foreign exchange reserves of around $710 billion, which provide a buffer against external shocks.
He further pointed to resilient domestic indicators, including strong digital transactions and improving fiscal metrics, as factors supporting overall economic stability.
