India stabilises interest rates on Middle East war
लगानी न्यूज
. India’s central bank decided to keep interest rates unchanged on Wednesday, evaluating the impact of the war in the Middle East. Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that the benchmark repurchase rate of 5.25 per cent will remain unchanged.
The decision was taken unanimously by the RBI’s six-member Monetary Policy Committee (MPC).TAG_OPEN_div_18 Malhotra said the monetary policy committee has taken into account the risks of inflation but the fundamentals of the economy have given enough flexibility to deal with the current challenges.
The Iran war, which began on February 28, has put pressure on the value of the Indian rupee and increased the risk of inflation.TAG_OPEN_div_16 Meanwhile, a two-week ceasefire announced by US President Donald Trump on Tuesday and signs of the Strait of Hormuz reopening are likely to ease fuel pressures and stabilise food and energy supplies.
The RBI has taken drastic steps to control speculation in the money market in recent weeks, which has somewhat improved the rupee’s weakening position.TAG_OPEN_div_14 Analysts at Nomura Bank have rated India as one of the most vulnerable economies to the Middle East being hit by energy price shocks.
Analysts had said that a decision to keep it steady this time was expected after the RBI cut interest rates by 125 basis points in February. Governor Malhotra said, “Given the change in the situation and the growth-inflation outlook, it is advisable to keep the monetary policy stable.” ”
India, which relies heavily on the Middle East for a large chunk of its oil and liquefied petroleum gas, seeks to stabilize the economy through the move.TAG_OPEN_div_10 Analysts have rated this decision positively to give confidence to foreign investors and reduce volatility in the international market.
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