economy
April 25, 2026
India's Central Bank Warns of Inflation Risks from Iran War
The Reserve Bank of India has warned of inflation risks and potential second-round effects due to the Middle East conflict, though growth remains resilient
TL;DR
- The Reserve Bank of India (RBI) has warned of rising inflation risks stemming from the Middle East conflict.
- Upside risks to inflation have increased due to supply-side disruptions and weather uncertainties.
- The RBI is adopting a 'watch and wait' approach, assuming the conflict will be resolved in a few months.
- The exact impact on energy prices depends on the conflict's duration and the speed of market normalization.
- While agriculture is noted as resilient to El-Nino impacts, concerns remain about inflationary pressure from rising petroleum product prices.
- India's economic growth is projected to slow in FY27, partly due to the Middle East conflict, but it remains one of the fastest-growing major economies.
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