US move on Iran oil to see inflation rise, RBI holding rates in June

CAD and rupee may come under pressure

An increase in global crude oil prices following the US’ decision to end relief to India and others on purchase of the commodity from Iran would slightly raise the inflation rates in the country, besides increasing the government’s import bill and subsidy burden. However, the impact on prices would not be high since the inflation rate is currently moderate. But, it would make the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) cautious and it may refrain from cutting the repo rate in its June policy, contrary to what was expected.

Devendra Pant, chief economist at India Ratings, said