HSBC's economists have warned that if crude oil prices sustain above $100 per barrel, it could drive India's headline inflation beyond 6%, which is the upper limit of the Reserve Bank of India's (RBI) tolerance band. This situation may prompt the RBI to consider interest rate hikes. The economists noted that if oil prices average below $100, consumer price inflation (CPI) would likely remain manageable. They emphasized the importance of a 'neutral' approach to both monetary and fiscal policies, suggesting that stimulating demand prematurely could lead to high and persistent inflation, similar to the economic challenges faced during the COVID-19 pandemic. The report highlights the delicate balance policymakers must maintain to avoid overstimulating the economy while also preventing a deepening growth slowdown. If the current energy shock continues, the negative impact on growth could overshadow inflation concerns.