CHENNAI: As expected, the Iran war and its impact on oil flow through the Strait of Hormuz dominated the discussions at the three-day Monetary Policy Meeting of the Reserve Bank of India that ended on Wednesday. While announcing the key decisions of the committee’s meeting, including deciding to keep the benchmark interest rate (otherwise known as repo rate) unchanged, RBI Governor Sanjay Malhotra explained the impact that the war would have on Indian economy and people. Here are some of the main points he spoke about:
Growth impulses continue to be supported by robust private consumption and investment demand. However, the West Asia conflict is likely to impede growth.
Higher input costs associated with an increase in energy prices and international freight and insurance costs, along with supply-chain disruptions that would constrain availability of key inputs for downstream sectors, would impair growth.
The economy is confronted with a supply shock. It is prudent to wait and watch the changing circumstances and the evolving growth-inflation outlook.
Also, disruptions in energy markets, fertilisers and other commodities may adversely impact industry, agriculture and services, reducing domestic output.
levated energy and other commodity prices, as also shocks to the availability of inputs due to disruptions in the Strait of Hormuz, are likely to impact growth in 2026-27.