Mumbai (Maharashtra) [India], April 8 : The Reserve Bank of India (RBI) on Wednesday said it has assumed an average crude oil price of $85 per barrel for FY 2025-26, in line with its CPI inflation projection of 4.6 per cent.
RBI Governor Sanjay Malhotra shared the estimate during a press conference after the Monetary Policy Committee decided to keep the repo rate unchanged at 5.25 per cent. He added that the crude oil price assumption for FY 2027-28 is $75 per barrel.
The projection follows the announcement of a temporary ceasefire between the United States and Iran. During the month-long conflict in West Asia, crude oil prices had surged to nearly $120 per barrel. As of 0130 IST, Brent crude was trading over 13 per cent lower at $94.68 per barrel. The ceasefire includes reopening the Strait of Hormuz for commercial shipping, with transit fees allowed for Iran and Oman.
"Oil prices tumbled today, with WTI and Brent falling below $96 per barrel after a conditional two-week ceasefire between the US and Iran," said Kaynat Chainwala, AVP, Commodity Research at Kotak Securities.
On inflation, Malhotra said headline inflation remained below target at 2.7 per cent in January and 3.7 per cent in February. Fuel inflation stayed moderate. For the full year, CPI inflation is projected at 4.6 per cent.
"Headline inflation for January and February stayed below the target at 2.7 per cent and 3.7 per cent, respectively...Inflation in fuel terms remained modest during this period. For the full year, the Consumer Price Index inflation is projected at 4.6 per cent," noted the RBI Governor.
The central bank expects inflation to be 4 per cent in the first quarter and 4.4 per cent in the second quarter. It may rise to 5.2 per cent in the third quarter before easing to 4.7 per cent in the fourth quarter.
The Governor cautioned that high energy and commodity prices could affect growth, as rising crude oil prices may push inflation higher.
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