India's central bank has left its benchmark interest rate unchanged as policymakers assess the economic impact of rising oil prices triggered by the ongoing conflict in the Middle East.

The Reserve Bank of India RBI announced today that it would maintain its benchmark repurchase rate at 5.25 per cent following a unanimous decision by its six-member Monetary Policy Committee.

The decision comes as several emerging and frontier market central banks, including those in Indonesia and Sri Lanka, have raised interest rates to curb inflation and stabilise their currencies amid heightened global uncertainty.

Although the Indian government has cushioned consumers through gradual fuel price adjustments, inflationary pressures are beginning to emerge. Retail inflation rose to 4.4 per cent in June, exceeding the RBI's medium-term target of four per cent for the first time in 17 months, though it remains within the bank's tolerance range of two to six per cent.

Analysts warn that continued disruptions in the strategic waterway could increase India's import costs, fuel inflation and place additional pressure on the country's economy through higher energy and fertiliser prices.

— CHANNELS