India's cenbank keeps rates steady at 5.25% — flags Middle East worries, currency pressures

A pedestrian walks past an Indian rupee symbol installation outside the Reserve Bank of India (RBI) building in Mumbai on May 17, 2026. Punit Paranjpe | Afp | Getty Images India's central bank on Friday held interest rates at 5.25% at a time when surging global energy costs have hammered its currency, while the Iran war risks accelerating inflation. The Reserve Bank of India was widely expected to keep rates steady, as per economists polled by both Reuters and CNBC. RBI Governor Sanjay Malhotra said in his statement that the "monetary policy has turned more cautious" as the global economic outlook remains clouded by the "geopolitical impasse" in the Middle East. He added that "sharply escalating energy prices and global supply chain disruptions continue to hinder economic activity." The conflict in the Middle East has posed a severe risk to the Indian economy , as energy supply disruptions have inflated the country's import bill, piling pressure on the rupee that has already been hit by record foreign investor outflows . In an attempt at shoring up the currency, Prime Minister Narendra Modi last month urged citizens to pause gold purchases, conserve fuel, and avoid overseas travel. Policymakers have also taken action to defend the rupee, including selling dollars through state-run banks to stem its slide, according to a Reuters report. The government has also raised duties to curb demand for gold, a move aimed at conserving foreign exchange reserves. …