RBI's Future Rate Cuts: What's Driving the Decision?
RBI Governor Sanjay Malhotra discusses the factors influencing potential future rate cuts, emphasizing inflation and growth outlooks over current data. He assures that the central bank has additional measures besides rate cuts to spur economic growth and tackle challenges, while maintaining financial stability.
- Country:
- India
As data pinned down inflation rates in June, Reserve Bank Governor Sanjay Malhotra emphasized that future rate cuts will rely on growth and inflation outlooks, not current figures. Speaking at the Financial Express Modern BFSI Summit, he underscored that the RBI is equipped with tools beyond rate cuts to drive the economy.
The central bank has slashed rates by 1% this year, as headline inflation dipped to 2.1%, fostering anticipation for further rate reductions. Malhotra pinpointed the importance of monitoring inflation forecasts over the next 12 months, acknowledging potential downward revisions in projections.
June data shows a 0.50% decline in bank lending rates, reflecting effective transmission of RBI's rate cuts aimed at boosting credit growth. Malhotra reassured that these measures would not generate asset bubbles and emphasized ongoing regulatory initiatives, including simplifying the plethora of existing regulations for better economic conditions.
(With inputs from agencies.)
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