Global Economic Conditions
Central banks' standard models creaking under global turmoil, says RBI Malhotra
This story was originally published at 16:28 IST on 3 October 2025
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--RBI Malhotra: India econ well settled in an equilibrium of growth
--RBI Malhotra: Global Fincl conditions eased despite uncertainties
--RBI Malhotra: Tariffs with high public debt may put all econs to risk
--RBI Malhotra: Trade uncertainties a risk to growth for all econs
--RBI Malhotra: Volatile gold price acting as barometer for global uncertainty
--RBI Malhotra: Current trade policies can permanently damage some econs
--RBI Malhotra: India macroecon fundamentals strong despite global uncertainty
--RBI Malhotra: Global econ may perform below potential on trade uncertainties
--RBI Malhotra: Global econ to perform lower than potential for some time
--RBI Malhotra: Despite US tariff, global econ surprisingly resilient
--RBI Malhotra: Amid uncertainty, monetary policy swiftness stood out for India
--RBI Malhotra: Despite geopolitical tensions, oil prices range-bound
--RBI Malhotra: U-turn in global trade policies reversed years of integration
--CONTEXT: RBI Governor Malhotra speaking at Kautilya Economic Conclave
--RBI Malhotra on global turmoil: Cannot control storm but can steer ship
--RBI Malhotra: Central banks standard models creaking amid tumultuous condition
NEW DELHI – The standard models for regulation of all central banks globally are creaking under the contemporary tumultuous global economic conditions, Reserve Bank of India Governor Sanjay Malhotra said Friday. But India is well placed in an equilibrium of growth thanks to the RBI's flexible frameworks as well as coordinated monetary and fiscal policies, the governor said.
Speaking about the evolving global uncertainties, without naming any economy, Malhotra said the drastic U-turns in the trade policies of some economies reversed years of integration. The US, in recent times, has shown a major shift in its trade policies with high tariff impositions.
Despite the tariff announcements by the US, the global economy has surprisingly shown resilience, and the equity markets are also complacent, Malhotra said at the Kautilya Economic Conclave. But the trade uncertainties do pose risk to the growth of all economies, especially those with high public debt, Malhotra added. In fact, the current trade policies can damage some economies permanently, the governor said.
On Indian goods, the White House has imposed 50% tariffs, which may have some impact on India's outward shipments, considering the US is India's top export destination. However, the Indian economy may not suffer permanent damage due to the US tariffs. India exported $86.51 billion worth of goods to the US in 2024-25 (Apr-Mar) and had a trade surplus of $40.82 billion.
India's macroeconomic fundamentals are strong despite global uncertainties, Malhotra said. The RBI this week also raised its GDP growth projection for FY26 to 6.8% from 6.5?rlier.
The global economy may perform below potential due to the trade uncertainties, Malhotra said. The governor also pointed out that the crude oil prices have been range-bound despite the global uncertainties. Gold prices, on the other hand, are the new barometer for uncertainties, the governor said.
Crude oil futures had fallen nearly 14% to $60.88 per barrel amid production hikes by the Organization of the Petroleum Exporting Countries and slower demand growth in the market. While gold futures had surged over 46% on year to record highs of $3,923.3 per ounce due to increased safe-haven demand amid geopolitical uncertainties and hopes of further rate cuts by the US Federal Reserve later in the year.
Drawing a metaphor between sailing in a storm and policymaking amid global economic turmoil, Malhotra said, "We cannot control the storm, but can steer the ship." End
US$1 = INR 88.77
Reported by Krity Ambey and Priyasmita Dutta
Edited by Ashish Shirke
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