India's Central Bank Holds Rates as Iran Crisis Keeps Risks High — Update

By Kimberley Kao and Fabiana Negrin Ochoa

India's central bank held interest rates steady on Friday, opting to pause as it assesses the impact of the Middle East conflict on the nation's currency and broader economy.

The Reserve Bank of India met against a backdrop of sharp rupee depreciation and acute economic risks, driven by the Iran crisis pushing up energy prices and threatening to stoke domestic inflation.

The RBI monetary policy committee revised down its growth forecasts and increased its inflation projections, but voted unanimously to hold the policy repo rate at 5.25%. This marks the central bank's third consecutive pause following a rate cut delivered in December.

Nine out of 11 economists surveyed by The Wall Street Journal had expected the RBI to stand pat on Friday, with two forecasting a 25-basis-point rate increase.