Reserve Bank of India (RBI) Governor Sanjay Malhotra indicated on Friday that policy interest rates could remain at low levels for a long time in the coming period and there is still room for further cuts. The RBI on Friday kept the repo rate unchanged at 5.25 percent while maintaining its ‘neutral’ monetary stance.
Addressing a press conference after the monetary policy review, Governor Sanjay Malhotra said that policy rates are likely to remain at low levels for a long time and further reductions could be seen in the future. However, he clarified that the final decision regarding interest rates will be taken by the Monetary Policy Committee (MPC).
RBI has cut repo rate by 1.25% in the last year
The central bank has cut the repo rate by a total of 1.25 percent since February last year. The Governor stated that the transmission of policy rate changes on the deposit side has been relatively slow and a further reduction in Fixed Deposit (FD) interest rates may be seen in the coming time.
Responding to a question about the impact of trade agreements recently signed by India, the Governor said that these agreements, along with other factors, could contribute up to about 0.20 percent to the country’s Gross Domestic Product (GDP) growth. Additionally, the RBI has raised the GDP growth forecast for the first and second quarters of the financial year 2026-27. Meanwhile, at the press conference, Deputy Governor T. Rabi Sankar said that the RBI will be able to manage the government’s borrowing program smoothly and seamlessly.
Government’s net borrowing set at ₹11.73 lakh crore for FY 2026-27
He informed that the government’s gross borrowing for the upcoming financial year has been pegged at ₹17.2 lakh crore and net borrowing at ₹11.73 lakh crore. Governor Sanjay Malhotra said that Treasury Bills and government securities will help in controlling yield rates, allowing the government to raise its net borrowing of ₹11.73 lakh crore at reasonable interest rates. Commenting on the budget announcements related to data centers, the Governor said that these steps are likely to bring large-scale foreign investment into the country. Meanwhile, in response to another question, he stated that a significant increase in currency in circulation has been recorded over the past year.
