Citi Research: India May Adjust GDP and Inflation Forecasts Amid Middle East Conflict

Citi Research indicated in a report that due to the Middle East conflict, the Reserve Bank of India (RBI) might lower its GDP growth forecast for the 2026/27 fiscal year and raise its inflation forecast. According to Jin10, Citi noted that despite the controlled inflation trajectory and growth uncertainties, the RBI is likely to keep the policy repo rate unchanged on Wednesday. Citi highlighted that unlike the early stages of the Russia-Ukraine conflict, the current overall and core inflation levels are starting from a favorable position. Citi's calculations suggest that even with significant price increases related to oil price shocks, there is minimal threat to the RBI's 6% inflation ceiling. Additionally, the current repo rate of 5.25% is not as low as the effective rate of 3.35% during the early stages of the Russia-Ukraine conflict.