The Reserve Bank of India (RBI) will make sure that any future cuts in the repo rate (the rate at which the RBI lends to banks) are passed on quickly to the people, said RBI Governor Sanjay Malhotra during a press conference. He added that the RBI will also keep enough money (liquidity) in the financial system but did not give an exact figure.
Malhotra explained that changes in interest rates don’t happen overnight. It usually takes about 6 to 9 months for the effects of a policy rate cut to be fully seen. “It won’t happen immediately,” he said. “When we increased the repo rate by 250 basis points earlier, it took months before the interest rates actually changed.”
He also mentioned that the goal is to make sure the policy rate affects all types of interest rates—short-term, medium-term, and long-term.
US Tariffs Won’t Hurt India Much, Says RBI
The RBI Governor also spoke about the new tariffs imposed by the US and said that India won’t be affected as much as other countries. However, he said the real concern is how it could impact India’s economic growth.
“For India, our growth rate has been lowered by 20 basis points,” he explained. “Inflation could go either way. Because of weaker demand, it might even help inflation. Also, oil prices are lower now.”
He added that while US inflation is expected to go up due to the tariffs, the global economy is also expected to slow down. Global growth projections have been reduced by 20 to 30 basis points for this year and next year.
Inflation and Loan Situation Under Control
Governor Malhotra said there’s no issue with the growth in personal loans offered by banks. The RBI and the government will keep a close watch on both inflation and growth as things develop.
He predicted the Consumer Price Index (CPI) inflation for the year will stay around 4%, assuming the monsoon is normal. For now, the RBI is not planning to change the rules for gold loans.
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