The Reserve Bank of India keeps interest rates unchanged, stating that the economy is resilient to shocks from Iran.

Investing.com- The Reserve Bank of India on Wednesday, as markets broadly expected, maintained interest rates unchanged, and Governor Sanjay Malhotra emphasized that the Indian economy has shown resilience in the face of adverse factors stemming from the Middle East war.

The Reserve Bank of India, as expected, kept the benchmark rate unchanged at 5.25%.

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In the post-meeting live broadcast, Governor Malhotra said that over the past few months, global geopolitical uncertainty has surged, and the Iran conflict could further disrupt global growth.

Malhotra said that although the United States and Iran have announced a ceasefire, ongoing disruptions in the energy, shipping, and insurance markets may affect economic growth.

“Due to the continued conflict in West Asia, uncertainty remains elevated, and the risks to the baseline forecast are skewed to the downside,” Malhotra said in the broadcast.

He noted that higher global energy prices have fed through, leading to price increases for some fuel projects, but inflation has remained moderate in recent months.

Malhotra said the Reserve Bank of India expects inflation in the Indian Consumer Price Index to reach 4.6% for fiscal year 2027, and GDP growth to rise to 6.9%. By contrast, the CPI forecast for fiscal year 2026 is 2.6%, and the GDP forecast is 6.8%.

It is understood that the central bank intervened in the foreign exchange market multiple times between late March and early April in an attempt to curb the depreciation of the rupee. As markets fear that disruptions to energy imports could have a bigger impact on the Indian economy, the Indian currency against the US dollar has continued to set consecutive record lows.

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