Economists at HSBC have warned that sustained crude oil prices above $100 per barrel could push India's headline inflation above 6%, surpassing the Reserve Bank of India's (RBI) tolerance limit. They predict that if oil prices average below $100, consumer price inflation (CPI) will remain manageable. With the RBI's monetary policy meeting approaching, there is speculation about potential interest rate hikes to defend the Indian Rupee (INR). The report cautions against premature demand stimulation, which previously led to high inflation during the COVID-19 pandemic. Instead, it recommends maintaining a 'neutral' monetary and fiscal stance, which includes keeping the fiscal deficit close to FY26 levels and adjusting fuel prices to manage the deficit. The economists highlight the delicate balance policymakers must strike to avoid deepening the growth slowdown while addressing inflation concerns.