Kolkata: The Reserve Bank of India MPC (monetary policy committee) voted unanimously to reduce the Repo Rate by 25 basis points thereby bringing it down to 6%, marking the second successive trimming by the same extent, raising the prospect of lower EMIs on all types of loans that could boost consumption in the country. Growth will continue to be the focus of the central bank, emphasized governor Sanjay Malhotra as he raised hopes of lower inflation.
The MPC will continue to support growth and the stance has been changed from neutral to accommodative. It means that going forward there will be rate cuts or maintaining status quo contingent upon the fact that there are no unforeseen shocks, said RBI governor Sanjay Malhotra.
Inflation outlook
Inflation management was one of the bright spots on the macroeconomic front, clarified the RBI governor, pointing out to the sharper-than-expected decline in food inflation. Though food inflation is a respite the global uncertainties, triggered by the US trade tariffs, gives rise to unexpected headwinds. He also said that with good rabi crop and sound reservoir levels, agriculture promises to be good this year. “The monsoons will also be good and El Nino will be absent,” mentioned Malhotra.
“Inflation is currently below the target,” pointed out Malhotra, adding the inflation projections for the four quarters in FY26 are 3.6% (Q1), 3.9% (Q2), 3.8% (Q3) and 4.4% (Q%). He also pointed out that the inflation trajectory could be in durable alignment with 4% target of RBI.
Growth outlook
The growth outlook in the current year would hover between 6.3% and 6.7% in the four quarters in FY26, said Sanjay Malhotra. He set out the growth rate projections for the four quarters — 6.5% in Q1, 6.7% in Q2, 6.6% in Q3 and 6.6% in Q4. Pointing out the growth boosters, he said that the positive agriculture outlook bodes well for rural demand and said that urban consumption is also showing signs of picking up. Investment, too, is gradually picking up, he mentioned and said that banks and companies have healthy balance sheets. He also mentioned that the change of stance by the central bank from neutral to accommodative will also help the process of growth.
The RBI boss pointed out that uncertainty in itself dampens growth by impacting investment. The dent on global growth due to trade tensions can also dampen growth. There can be imported inflation due to currency pressure, he said while highlighting that softer crude prices can help ease inflation. However, he pointed out that merchandise exports from India could suffer due to the tariff wars.
Non-inflationary growth could mark the economic path ahead for India said RBI governor Sanjay Malhotra as he set out inflation below the 4% target of for three quarters out of four in the current financial year. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
