1 hr ago
RBI to Reassess Growth, Inflation Outlook Amid Rising Crude Prices
Crude oil has become more expensive because of the West Asia crisis.
This could make prices rise in India, but the final effect depends on how much of the increase reaches consumers.
The government has absorbed some of the higher cost to reduce the shock.
RBI Governor Sanjay Malhotra said the central bank will study the situation carefully.
The RBI’s policy committee will review growth and inflation at its next meeting.
The committee will look at whether higher prices continue and spread across the economy.
Foreign investors also placed a large amount of money in special foreign-currency deposits.
These deposits helped support India’s foreign-exchange market and financial stability.
The RBI says it can manage extra money in the banking system with its available tools.
RBI Governor Sanjay Malhotra said the Monetary Policy Committee will reassess growth and inflation dynamics at its October meeting.
The Indian crude oil basket rose from an average of USD 82 in July to USD 90 in August, according to Malhotra.
Malhotra said higher crude prices could affect inflation, depending on how much of the increase is passed through.
FCNR(B) deposits mobilised through the RBI’s forex swap facility totalled USD 127.22 billion, with nearly half held for five years.
The governor said the RBI has sufficient tools to manage surplus banking-system liquidity and will use them if needed.
- Who
- RBI Governor Sanjay Malhotra and the Monetary Policy Committee.
- What
- The RBI will reassess India’s growth and inflation outlook amid rising crude oil prices, while monitoring foreign-currency deposit inflows and banking liquidity.
- Where
- India; the comments were made in an interview with CNBC-TV18.
- When
- The MPC is scheduled to meet on October 5-7, 2026; Malhotra spoke on Friday, September 11.
- Why
- Rising crude oil prices linked to the ongoing West Asia crisis may affect inflation, while strong FCNR(B) inflows and surplus liquidity require monitoring.
Key facts
- Crude oil price
- The Indian crude oil basket averaged USD 82 in July and USD 90 in August, according to Malhotra.
- FCNR(B) inflows
- Deposits mobilised through the recently concluded RBI forex swap facility totalled USD 127.22 billion.
- MPC meeting
- The next Monetary Policy Committee meeting is scheduled for October 5-7, 2026.
- Five-year deposits
- Approximately 48.5-50 per cent of FCNR(B) deposits have a five-year tenor.
- Three-to-four-year deposits
- About 42 per cent of the deposits fall within the three-year to four-year maturity bracket.
- Four-to-five-year deposits
- Around 9 per cent are held in the four-year to five-year tenure window.
- Liquidity management
- The RBI says it has enough tools to manage surplus liquidity in the banking system.
Quotes
Sanjay Malhotra
Governor of the Reserve Bank of India
“Crude has gone up. July was for the Indian basket an average of 82 billion dollars. August it has gone up to 90 billion dollars and so that will certainly have some impact, but it will depend again on the pass-through.”
freepressjournal.in
“It demonstrates at the same time that we can get foreign flows, capital flows, in a short period of time. This helps us, in terms of financial stability, external sector resilience. We are quite happy with the result.”
freepressjournal.in
Sources
Related news
RBI Governor Flags Two-Sided Inflation Risks Ahead of October Review
RBI Waits on Rate Recalibration Amid Broadening Inflation Risks
RBI MPC Keeps Rates Unchanged Amid Food and Fuel Risks
Rupee tumbles as RBI advances FCNR(B) swap closure
RBI Governor Defends Early Closure of FCNR(B) Swap Window
Rupee Gains as Softer Dollar Counters Oil and Geopolitical Risks
RBI Says Foreign Reserves Will Generate Income Amid Liquidity Surge
BRICS Explores Faster Local-Currency Payments Ahead of 2026 Summit
RBI Governor Calls Fintech Firms Key Partners for Inclusion
