India's Monetary Policy Committee finds room to delay rate hikes as oil prices plunge

Oil prices have declined about 16% since the June Monetary Policy Committee (MPC) meeting, with Brent crude falling from around $95 per barrel to lower levels after a peace agreement and the gradual opening of the Strait of Hormuz. ICICI Global Markets Economic Research said the lower energy prices improve the inflation outlook, noting that underlying core inflation remains benign while recent price increases are driven mainly by food and fuel.

The research noted that domestic growth remains resilient, but risks persist from weaker exports to the Middle East, higher energy costs and a weak monsoon. If oil prices stay near $80‑85 per barrel, the MPC could revise its inflation projections lower at the August meeting, reducing the near‑term odds of a rate increase. ICICI’s base case still allows for a 50‑75 basis‑point hike, depending on June CPI and core CPI data, giving the committee flexibility to time policy normalisation.