RBI in wait and watch mode amid West Asia crisis, says Gov Sanjay Malhotra

The Reserve Bank of India (RBI) is closely monitoring the fallout from the West Asia conflict and will not make firm commitments on the future path of interest rates, Governor Sanjay Malhotra has said, adding that prolonged supply disruptions risk embedding inflation into India’s broader price level.

In his speech at Princeton University in the US, Malhotra said the ongoing conflict poses a direct threat to the Indian economy given the region’s outsized role in the country’s



trade. 

Moreover, West Asia accounts for roughly one-sixth of India’s exports, one-fifth of its imports, half of its crude oil imports, two-fifths of its fertiliser imports, and nearly two-fifths of inward remittances, according to him, “Second-round effects are the real concern,” he stated.

The RBI Governor warned that what begins as a supply shock can become embedded in the general price level if disruptions persist. He signalled that the central bank was in no hurry to move on rates. “We are in a wait-and-watch mode,” he said.