India's central bank keeps benchmark rates steady, cites 'moderate' core inflation
The Reserve Bank of India has kept interest rates unchanged amid creeping inflation.
India's central bank, the Reserve Bank of India (RBI), maintained its benchmark interest rate at 5.25% for the fifth consecutive time on Wednesday. While headline retail inflation has surpassed the RBI's target of 4%, core inflation - which excludes precious metals - remains moderate, according to the bank. RBI Governor Sanjay Malhotra stated that core inflation, which peaked in the December quarter, is expected to decline after the peak.
Malhotra emphasized the need for clearer understanding of inflation's path and composition before making policy decisions. The central bank also cautioned that while economic growth has been resilient, it is projected to be lower in the current financial year due to uncertainties stemming from the southwest monsoon, El Nino, geopolitical factors, and global trade policies.
India's economy is particularly vulnerable to supply disruptions caused by the Iran conflict, as it relies heavily on fuel imports. Moreover, the risk of a below-average monsoon this year adds to the macroeconomic headwinds.
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