A possible US-led war against oil-rich Iraq would have a limited impact on India's inflation, the Reserve Bank of India's deputy governor Rakesh Mohan said on Thursday.
"If there is a war and oil prices rise there will certainly be an impact on inflation," he told reporters on the sidelines of a conference.
"But given our past experience when oil prices have risen from about $20
a barrel to the current levels, the inflation has hardly risen. So, the impact will be limited."
Government bond traders fear that a war could push up prices of crude, India's biggest import item, stoking domestic inflation and putting pressure on low interest rates.
India's annual inflation rate rose to 3.72 per cent in the week ended January 11 from 3.66 per cent in the previous week and 3.02 per cent at the end of October.
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