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India’s CPI View Assumes Oil at $80 With Risks Seen Manageable

  • Government can check prices better than RBI, policy maker says
  • Rate panel will act if inflation remains persistently high
A gas station near an oil refinery in Jamnagar, Gujarat, India.

A gas station near an oil refinery in Jamnagar, Gujarat, India.

Photographer: Dhiraj Singh/Bloomberg

The Indian central bank’s subdued inflation forecast for next financial year assumes oil at $80 a barrel, and risks to that outlook from Russia’s war-induced supply disruptions are best handled by the government, according to a monetary policy maker.

“If international oil sustains above this for a substantial period and there is pass-through to domestic oil prices, projected inflation would rise,” Ashima Goyal, an external member on the Reserve Bank of India’s six-member Monetary Policy Committee, said in an email interview. “Inflation targeting theory tells us that tightening monetary policy under supply shocks, or if there are unemployed resources, imposes a large output sacrifice,” she said.