RBI Governor Expects ‘Long Period Of Low Policy Rates’ For India
Malhotra struck an optimistic note on the country’s economic outlook, saying India is “having the best of both worlds — low inflation and high growth."
Reserve Bank of India Governor Sanjay Malhotra said India is likely to remain in a prolonged period of low policy rates as long as inflation stays benign and the economy is not hit by a major supply-side shock.
“I do feel inflation will remain benign for a long time,” Malhotra said in an interview to India Today. “And if that is so, barring shocks on the supply side, the weather, geopolitics or something else, we’re in for a long period of low policy rates.”
India’s inflation rate picked up in November from a record low in the previous month but stayed well below the central bank’s 4% target. The RBI cut interest rates by 25 basis points earlier this month and signaled its willingness to ease monetary policy further, citing soft inflation readings.
In the India Today interview, Malhotra struck an optimistic note on the country’s economic outlook, saying India is “having the best of both worlds — low inflation and high growth. That’s a sweet spot to be in.”
Malhotra also reaffirmed the RBI’s market-driven exchange rate approach and said the central bank does not target any specific exchange rate level and will intervene only to curb excessive volatility.
“We are well poised to meet all our external requirements and so the rupee should be at a level which supports our Indian economy,” he said.
