RBI Governor Sanjay Malhotra says interest rates are likely to remain low in medium to long term

 
Reserve Bank of India (RBI) Governor Sanjay Malhotra today said interest rates are likely to remain low in the medium to long term, supported by benign inflation and strong macroeconomic fundamentals. Addressing a post-monetary policy press conference, the Governor said the Indian economy remains “very strong, resilient and robust,” adding that the current policy stance is neutral, leaving room for movement in either direction. However, he noted that the continuation of low interest rates for a longer period remains a strong possibility.
The RBI has projected GDP growth at 6.9 percent for the current financial year, underlining confidence in the economy despite global uncertainties. Governor Malhotra highlighted that structural reforms and coordinated efforts by the government, RBI and other institutions continue to support growth while keeping inflationary pressures under control. On inflation, the central bank has estimated it at 4.6 percent for 2026-27, well within the target band of 2 to 6 per cent, reinforcing the outlook for stable prices.
Earlier in the day, the RBI’s Monetary Policy Committee unanimously decided to keep the benchmark repo rate unchanged at 5.25 per cent, adopting a cautious “wait-and-watch” approach. The decision comes amid heightened global uncertainty, particularly due to the recent West Asia tensions, which led to a spike in crude oil prices, weakening of the rupee and disruptions in global trade flows. Governor Malhotra said the central bank has factored in the recent ceasefire developments in its assessment. He noted that external shocks, including geopolitical tensions, continue to pose risks to inflation and growth, necessitating a calibrated policy approach.
On monetary transmission, the Governor said banks have passed on about 90 basis points reduction in lending rates against a cumulative 125 basis points cut in the repo rate. On the deposit side, transmission has exceeded 100 basis points, which he termed as satisfactory. Addressing concerns on currency market measures, Governor Malhotra clarified that steps taken by the RBI were aimed at curbing excessive volatility in the rupee and are not structural in nature. He reiterated the central bank’s commitment to further developing and deepening financial markets, adding that such temporary measures will not remain in place permanently. The RBI Governor emphasised that despite recent volatility in the forex market, India’s macroeconomic fundamentals remain strong, providing stability and supporting sustained economic growth in the coming period.