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Informist, Wednesday, Dec. 17, 2025

MUMBAI – Reserve Bank of India Governor Sanjay Malhotra indicated that India's interest rates are likely to remain low for a "long period" as per the central bank's forecasts, in an interview with newspaper Financial Times Wednesday. The central bank's latest forecasts have not considered the potential impact of trade agreements currently being negotiated, including those with the US and Europe, Malhotra said. If such deals are cemented, it would raise the GDP growth rate, Malhotra told the newspaper at the RBI headquarters.

"The impact of the US trade deal could be as much as about half a percentage point," the Financial Times quoted Malhotra saying.

The central bank did not take into account the impact of a trade deal with Europe as deeply as one with the US, but it too would cause a rise in growth, Malhotra said. 

India's GDP growth for the September quarter was 8.2%, above the RBI's forecast of 7.0%. In the interview, Malhotra said that the print "was surprising" and that the central bank had to "improve" its forecasting. When asked if issues with economic data made the central bank's decisions tough, Malhotra said that there will always be some margin of error, as the figures get revised. Malhotra said that such a margin of error has to be always remembered when making policies. Other than that, "the figures are quite robust," Malhotra said. 

As for the management of the rupee, Malhotra said that as governor, he has not diverged from previous RBI policy. Malhotra reiterated that the central bank does not target a specific level of the local currency, and sells dollars just to curb excess market volatility.

Malhotra said his main focus has been on maintaining financial stability and strengthening the financial system, Financial Times reported. Malhotra termed the central bank's recent loosening of regulations for banks and other non-bank lenders as 'incremental measures'. He said these regulations are a 'work in progress', and some of which are decades old, have 'lost their edge' and need to be refined.  End

Compiled by Cassandra Carvalho

Filed by Akul Nishant Akhoury 

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