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Informist, Wednesday, Apr. 8, 2026

 

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--RBI Malhotra: Not in position to say what MPC will do at next meeting 
--RBI Malhotra: Real rates as of now are still high 
--RBI Malhotra: Real rates are about 2% or so, they are not low 
--RBI Malhotra: MPC thought it is time wait for data, take call ahead 
--RBI Malhotra: We are in neutral state 
--RBI Malhotra: Quite possible that lower rates continue for a long time 
--RBI Malhotra: Long-term macro fundamentals are strong 
--RBI Malhotra: Macro fundamentals strong, continue to drive growth 
--RBI Malhotra: Even in short-medium term, possible we will have low rates 
--RBI Malhotra: Short to medium term we may continue to have low rates 
--RBI Malhotra:Will take many months for supply shock to become demand shock 
--RBI Malhotra: Don't think FY27 growth estimate of 6.9% too optimistic 

 

MUMBAI – Interest rates in India can possibly stay low in the short-to-medium term despite risks to the growth and inflation outlook from the war in West Asia, Reserve Bank of India Governor Sanjay Malhotra said Wednesday. A structurally strong and resilient Indian economy and a neutral monetary policy stance may allow interest rates to stay low, the governor said in a press conference. 

 

The RBI's Monetary Policy Committee Wednesday left the repo rate unchanged at 5.25% and maintained the neutral stance, in line with expectations. Malhotra flagged that the war in West Asia poses risks to India's growth and inflation but macroeconomic fundamentals remain strong. 

 

"We are in a neutral state," Malhotra said. "Possibility either way cannot be ruled out. It is quite possible that these low rates continue for a long time."

 

There is no pre-set course of action for monetary policy, Malhotra said. The rate-setting panel will look at various factors over a period of time to take a call on interest rates, he added. "Things are evolving so drastically and so frequently every day, so we have to be prepared. And so we will not be in a position to say what the MPC is going to do in the next meeting," Malhotra said, adding that it will take many months for the supply shock from the West Asia war to become a demand shock.

 

India's long-term macroeconomic fundamentals remain very strong and continue to drive growth and keep price pressures contained, Malhotra said. "So it's quite possible that even in the short to the medium term, we will continue to have low rates," the governor said. "It's quite possible."

 

The RBI has projected India's GDP to grow 6.9% in the current financial year. Malhotra said the growth estimate is not too optimistic even as the war in West Asia poses downside risks to growth. "If there is a prolonged disruption in the supplies, which we hope should normalise sooner than later, that can put pressure on the assessment of growth of 6.9%," Malhotra said. India's GDP growth is projected at 7.6% for FY26, according to the government's second advance estimate. 

 

Malhotra said real interest rates--rate of return over and above the expected rate of inflation in an economy--are still high. Real interest rates are around 2%, they are not low.  End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

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