Oil prices risk to financial stability: RBI

Policy-makers need to watch the evolving global economic situation ‘carefully’ and be prepared to “respond to emerging challenges promptly and effectively”, Reserve Bank of India Deputy Governor said.

“While I see good prospects for the global economy, there are a number of risks emanating from the behaviour of oil prices, adverse developments in the US housing market, persistence of global imbalances and possible emergence of inflationary pressures,” Rakesh Mohan has said.
His comments were part of his statement to the International Monetary and Financial Committee at Washington posted on the RBI’s website today.

Describing the decline in oil prices from their peak levels of August 2006 as the “most important factor” in reduction of risks, Mohan said the recent firming up of prices made it unclear at what level oil prices would stabilise.

Financial Express