RBI Governor Sanjay Malhotra signals low interest rates amid strong growth, subdued inflation, and optimism over trade deals.
New Delhi
Reserve Bank of India (RBI) Governor Sanjay Malhotra has indicated that key policy interest rates are likely to remain low for a long period, supported by the central bank’s economic projections and prevailing macroeconomic conditions. According to a report published by the Financial Times, Malhotra expressed confidence that India’s economy is witnessing robust growth while inflation remains firmly under control, creating favourable conditions for maintaining an accommodative monetary environment.
The RBI Governor further noted that India’s economic growth could exceed the central bank’s current projections if ongoing trade negotiations with major global partners are successfully concluded. In particular, he highlighted the potential impact of a proposed trade agreement with the United States, stating that such a deal alone could add as much as half a percentage point to India’s economic growth. While the RBI has not yet undertaken a detailed assessment of the potential benefits of a trade agreement with the European Union, Malhotra said it is also expected to provide an additional boost to growth.
Responding to concerns raised by some economists regarding the quality and reliability of India’s economic data, Malhotra defended the robustness of official figures. He acknowledged that data revisions do occur from time to time but emphasised that the overall numbers remain credible and reliable for policy formulation. On December 5, the RBI announced a 25 basis point cut in the repo rate, bringing it down to 5.25 per cent from 5.5 per cent earlier. The move was aimed at supporting economic growth amid favourable inflation trends.
