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Closely tracking West Asia situation; discussion on interest rate hike premature: RBI Governor
Jun-25-2026

Amid ongoing geopolitical developments in West Asia, the Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that the central bank is maintaining a close watch on the rapidly evolving situation in West Asia and at this stage, discussion on interest rate hike is premature.

Malhotra described the easing of tensions in West Asia as a significant positive development for both the global economy and India, saying it bodes well for economic growth and inflation management. He added that the recent cooling of crude oil prices and the sharp correction in urea prices are providing comfort to the Indian economy.

Stressing that the Indian economy is resilient, he said, ‘The government and the OMCs (Oil Marketing Companies) together cushioned the impact of the energy shock to a great extent, and all high frequency indicators show that India has weathered the shock quite well in very uncertain times’.

While acknowledging that risks have moderated, he cautioned that policymakers were not yet ready to draw definitive conclusions on the inflation outlook. He said the RBI is closely monitoring whether fuel-led wholesale price pressures spread to the broader economy. As of now, he said, the central bank does not see evidence of inflation becoming generalised. Apart from crude oil prices, the RBI is also tracking the progress of the monsoon, which could influence the inflation trajectory in the coming months. Malhotra said ‘Both are uncertain. Both have consequences for inflation. And so we'll be watching...both.’


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