New Delhi, June 15 -- The decision by the US and Iran to halt the war is likely to give the six-member committee that sets India's interest rates some breathing room, easing concerns over oil-led inflation that had clouded its outlook. Until now, the panel had been grappling with the uncertainty over when and how the over three-month-old war would end.

Experts are also quick to caution that while a breather could be in the offing, policymakers are unlikely to lower their guard just yet.

The peace deal-details of which remain patchy-is expected to be signed on Friday and will end the chokehold on shipments in the Strait of Hormuz, a narrow conduit through which about one-fifth of global oil supply passes. For India, which imports about 9...