Reserve Bank of India Governor Sanjay Malhotra has stated that interest rates are expected to stay low for an extended period, pointing to the strength of the Indian economy and the potential benefits from forthcoming trade deals with the US and Europe. In an interview with the Financial Times, Malhotra stated that the central bank’s projections suggest policy rates are expected to stay low for an extended period.
Speaking on the trade deal and road ahead Governor Sanjay Malhotra noted that the RBI’s growth projections do not factor in the potential impact of trade agreements. India is negotiating trade deals with the US and Europe, which could enhance economic growth. Governor also stated, “A trade deal with the US could raise economic growth by around half a percent.”
While speaking on the GDP part for September quarter, stronger-than-expected GDP growth of 8.2% in the September quarter, above the RBI’s 7% forecast, prompted the central bank to revise its economic outlook. However, growth is likely to slow due to the US’s 50% tariff, affecting exports and sectors from textiles to chemicals.
Moving ahead on Impact of Trump’s 50% Tariff on India’s Economy Governor states, US President Donald Trump’s 50% tariff on India has affected the world’s fifth-largest economy, widening the trade deficit and pushing the rupee to a record low. Despite this, retail inflation remains subdued and GDP growth strong. To support economic momentum, the RBI cut the repo rate by 25 basis points earlier this month and boosted banking sector liquidity by $16 billion.
While speaking on the reliability of Economic Data, RBI Governor Malhotra says economic data revisions are inevitable but overall figures remain robust, and policymakers account for such adjustments when making decisions.
