RBI Governor Lauds Central Bank Independence In India Amid Clouds Over Fed Autonomy

Reserve Bank of India Governor Sanjay Malhotra has underscored the importance of central bank autonomy at a time when the US Federal Reserve has been rocked by a criminal probe against Chair Jerome Powell.

In an exclusive conversation with NDTV Profit, Malhotra offered a veiled but firm defence of the central bank's independence amid the ongoing rift between the White House and the Federal Reserve, particularly the criminal investigation opened this week.

When asked about the comfort of India's stable central banking regime in contrast to the turmoil in Washington, Malhotra stressed that the separation of monetary authority from government influence must be protected globally.

"Central bank independence, of course, you know, is very important. We have, over the years, moved globally — we have moved towards that for some reason because it's important to separate that from government," he said.

The statement from the governor comes against the backdrop of rising tension between the White House and the US Federal Reserve, which was exacerbated further after Powell confirmed he had received a criminal probe by the US Department of Justice, focusing on alleged irregularities in renovation costs at Fed's headquarters in Washington.

While Malhotra did not directly address the charges against Powell, he urged a collective commitment to the principles of autonomy when it comes to modern central banking.

"That is something that we need to all collectively across jurisdictions preserve, and hopefully... that should only improve over the years," Malhotra said.

The investigation into Powell marks the first time a sitting Federal Reserve Chair has faced the threat of criminal indictment, sending shockwaves through global markets.