The escalating conflict in the Middle East βhas piled up pressure on global central banks and dramatically impacted the outlook, with the huge supply shock posing a difficult trade-off between economic growth and countering inflation.
For emerging Asian central banks, cutting interest rates has become a β risky bet not just because of the added price pressure from β higher fuel costs, but also the risk of triggering capital outflows through worsening terms of trade with the U.S.
The Reserve Bank of India (RBI), for one, expects to focus more on supporting growth by keeping interest rates low, sources have told Reuters.
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