Iran ceasefire taken into account for policy decision: RBI

Reserve Bank Governor Sanjay Malhotra on Wednesday termed the ceasefire between the US and Iran as “pleasant news”, which was taken into account while taking the policy decision hours later.

“At 5:30 am, we got some pleasant news, maybe not a complete surprise,” Malhotra told reporters at the customary post-policy-review interaction.

“The ceasefire, to some extent, has been taken into account. The whole implications (will come later), but the ceasefire has been taken into account in the monetary policy decision,” he added.

Although it was a scheduled review, the maiden policy review for FY27 by the Reserve Bank is the first such call taken by any central bank in the world after the ceasefire announcement.

Concerns have persisted over the last 39 days of the conflict in West Asia, triggered by the US and Israel’s joint attacks on Iran, and the Gulf country’s response to the crisis.

Malhotra said the six-member rate-setting panel, headed by him, meets before the announcement of the decision to the wider public at 10 am.

The central bank’s six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows.

During the course of the press conference, Malhotra also mentioned the upheaval in the financial markets, supply chain disruptions and the dent to economic activity as something that was “almost a crisis”.

Borrowing the old adage of never letting a crisis go waste, Malhotra recommended a slew of structural aspects beyond the short-lived turbulence, which we need to focus on going forward.

This includes accelerating the pace of adopting electric vehicles and upping self-sufficiency in oil to reduce import burdens, he said.