Synopsis: RBI Governor Sanjay Malhotra emphasized that the central bank will remain agile and proactive in managing liquidity, ensuring smooth credit flow and economic stability. Favorable conditions are expected to support rural demand and keep inflation below target in the near term.
Reserve Bank of India (RBI) Governor Sanjay Malhotra has reaffirmed the central bank’s commitment to being nimble, proactive, and data-driven in its liquidity management approach, amid evolving global uncertainties. Writing in the latest RBI Bulletin, he stressed that credible and consistent policy communication will continue to anchor monetary stability.
“Going ahead, the Reserve Bank will continue to be nimble and flexible in its liquidity management. We will endeavour to maintain sufficient liquidity in the banking system so that the productive requirements of the economy are met and transmission to money markets and credit markets remains smooth,” Malhotra noted.
Supportive Domestic Conditions
Favourable rainfall and temperature trends are expected to strengthen the kharif agriculture season, while rising real rural wages may boost rural consumption in the latter half of FY25. Combined with supportive fiscal measures, ongoing transmission of earlier rate cuts, and higher household optimism, aggregate demand is likely to remain resilient.
Inflation Outlook
The RBI Bulletin highlighted that the near-term inflation outlook has improved, aided by muted food price pressures and favourable base effects. Headline inflation is projected to dip below the 4% target in Q2 before edging higher in the final quarter of the fiscal year. “Overall, the average headline inflation this year is expected to remain significantly below the target,” it stated.
Global and Trade Risks
Despite supportive domestic financial conditions and India’s recent sovereign rating upgrade by S&P, downside risks remain from uncertainties related to India-US trade relations. However, the rating upgrade is expected to attract fresh capital inflows and support sovereign yields.
Policy Commitment
Malhotra reiterated that the RBI will maintain vigilance on growth-inflation dynamics, ensuring monetary policy remains aligned with the evolving needs of the economy. “We will continue to provide facilitative monetary policy based on incoming data and changing conditions,” he said.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. Readers are encouraged to follow official RBI releases and consult experts for policy-related decisions.
