India's inflation sits at 5%, right in the middle of the RBI's 5‑6% target band, prompting the central bank to keep its policy rate unchanged as oil prices surge to $95 a barrel. The IMF’s latest outlook signals a modest uptick in growth projections for the country, but warns that sustained oil price hikes could erode gains.
Oil prices have risen to $95 per barrel, the highest since 2023, feeding into inflation expectations. India’s energy intensity—oil and gas consumption at 4.5% of GDP—triple that of the EU, underscoring the country’s vulnerability to external shocks.
The RBI maintains a data‑dependent stance, prioritising price stability over exchange‑rate movements. With inflation comfortably inside its target band, the bank is unlikely to tighten policy unless expectations shift markedly.
Capital flows remain resilient, yet outward investment trends continue to weigh on the current account. The government is actively seeking to attract more foreign direct investment to counterbalance these pressures.
Going forward, traders will focus on the RBI’s next policy meeting in July and the IMF’s evolving growth outlook. Market participants are watching oil price trajectories closely, as any spike could prompt a quicker tightening of monetary policy.