“After making the policy announcement on 25th Jan, a whole set of events unfolded in the Middle East, which are starting to have an impact on oil prices, obviously, which we did not anticipate at the time we made the announcement,” Subir Gokarn, deputy governor at the central bank, said.
The crisis in Egypt has raised concerns of a disruption to supply of Middle East oil shipped through Egypt and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world’s oil.
“So, a completely new environment has emerged in a very short time after the announcement. It is going to have an impact on our thinking, our action going forward,” Gokarn added.
India’s central bank raised interest rates on Jan. 25 by a quarter of a percentage point to clamp down on resurgent inflation and warned of persistently higher food prices unless steps are taken to boost supplies.