Mumbai, Apr 8: Reserve Bank Governor Sanjay Malhotra on Wednesday expressed confidence that interest rates will remain low in the medium to long term, given the benign inflationary conditions.
Addressing the media, in a post-monetary policy conference, Malhotra said the Indian economy is very strong, resilient and robust.
“We are in a neutral state…possibility either way, any ways cannot be ruled out that low rates (would) continue for a long time,” he said.
Despite shocks, he said, the RBI is projecting a GDP growth of 6.9 per cent for the current financial year.
“Structurally, long-term, macroeconomic fundamentals, because of various measures which the government has taken, which the RBI has taken, which various institutions have taken, remain very strong and continue to drive growth on the one hand and at the same time keep price pressures contained”.
“So, it’s quite possible that even in the short to medium term, we will continue to have low rates,” he added.
Earlier in the day, the Reserve Bank of India kept its key policy rate unchanged, adopting a cautious wait-and-watch stance as policymakers assessed the impact of the six-week-long Iran conflict on energy supplies, inflation and growth.
The central bank’s six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows.
Malhotra also emphasised that the ceasefire has been taken into account in the monetary policy review.
The US has agreed to a two-week ceasefire with Iran, President Donald Trump announced 90 minutes before his deadline to wipe out civilisation from the West Asian nation was to end.
Trump made the dramatic announcement on Tuesday evening (US time) even as Democrats called for his removal over unhinged threats to wipe out the Iranian civilisation.
On GDP growth, the RBI projected a 6.9 per cent expansion of the Indian economy in the current financial year, lower than the expected 7.6 per cent growth in FY26. Inflation is estimated at 4.6 per cent for 2026-27 (April 2026 to March 2027), which is within the RBI’s 2 per cent to 6 per cent target range.
With regard to the transmission of a series of rate cuts by the RBI, Malhotra said banks have passed on about 90 basis points reduction on the lending side against 125 basis points moderation in repo rate.
“Similarly, on the deposit side, it’s more than 100. So, there has been a satisfactory transmission,” he said.
Asked about measures taken on currency market curbs, he said these steps were taken to check excessive volatility of the rupee, and these are not in any sense a structural change.
“We stand committed to the development, broadening and deepening of these markets…obviously, these are not measures which are going to remain there forever,” he said.
These measures were taken in view of heightened volatility in the forex market in the last few weeks of last month, he added. (PTI)
