Sanjay Malhotra on Wednesday indicated that interest rates in India are likely to remain low over the medium to long term, citing stable inflation trends and strong macroeconomic fundamentals. The remarks came during a post-policy press conference following the latest monetary policy review.
The Reserve Bank of India maintained a neutral stance, suggesting flexibility in responding to evolving economic conditions while acknowledging that the possibility of continued low rates remains strong. Malhotra emphasised that India’s economic structure remains resilient despite global uncertainties.
The central bank’s six-member Monetary Policy Committee unanimously decided to keep the benchmark repo rate unchanged at 5.25 per cent. The decision reflects a cautious “wait-and-watch” approach as policymakers assess external risks, particularly those arising from geopolitical tensions in West Asia and their impact on crude oil prices, inflation, and currency stability.
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Malhotra noted that recent global developments, including the ceasefire between the United States and Iran, have been factored into the policy outlook. The temporary easing of geopolitical tensions is expected to reduce pressure on energy markets and contribute to a more stable inflation trajectory in the near term.
On growth projections, the RBI has estimated India’s GDP to expand by 6.9 per cent in the current financial year, supported by strong domestic demand and policy measures. Inflation is projected at 4.6 per cent for 2026–27, remaining within the central bank’s target range, further reinforcing the case for a supportive interest rate environment.
The Governor also highlighted effective monetary transmission, noting that banks have passed on a significant portion of rate cuts to borrowers. Measures taken to curb rupee volatility were described as temporary, with the RBI reaffirming its commitment to maintaining stability while continuing to deepen India’s financial markets.
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