Why did Citi withdraw its earlier call for two RBI interest-rate hikes by March next year?

Citi withdrew its call for two interest-rate hikes by India’s central bank through March next year because an interim US-Iran peace deal has reduced the risk of higher oil prices fueling inflation, thereby removing one of the two major shocks — the Middle East geopolitical risk — that had pressured the Reserve Bank of India to tighten monetary policy.

How does Citi link the US-Iran truce to India’s monetary policy flexibility amid El Niño?

Citi states that if the Middle East truce holds, the Reserve Bank of India will not have to worry about at least one of the two shocks — the oil-price risk — and this will offer the monetary policy committee 'some space to be patient and look through the El Nino driven weather shock', meaning it can avoid immediate rate hikes despite poor monsoon conditions affecting agriculture and construction.

Citi Scraps Calls for RBI Hikes as Iran Deal Cools Price Risks

Jun 17, 2026

Citigroup eliminated forecasts for Indian interest-rate hikes following an Iran deal that reduced oil price risks, though El Niño remains a threat to agricultural staples like rice and soybeans. Revised oil forecasts lower India's import bill and current-account deficit.

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