Synopsis
On February 8, the Reserve Bank of India (RBI) emphasized its commitment to enhancing credit accessibility and maintaining liquidity in the banking sector. Governor Sanjay Malhotra stated that uncertainties surrounding US tariffs are likely to decrease, positively impacting the rupee's value.Key Takeaways
- RBI prioritizes credit availability.
- Governor Malhotra addresses US tariff impacts.
- Policy rate reduced by 25 basis points.
- GDP growth forecast at 6.7% for FY26.
- Inflation projections adjusted to 4.2% for FY26.
New Delhi, Feb 8 (NationPress) The Reserve Bank of India (RBI) has consistently prioritized credit availability and is poised to implement additional measures to guarantee adequate liquidity in the banking sector, as there remains opportunity for enhancement, stated Governor Sanjay Malhotra on Saturday. He also mentioned that uncertainties regarding US tariffs are expected to diminish in the following months.
Speaking to the press alongside Union Finance Minister Nirmala Sitharaman in the capital, Malhotra remarked that the central bank does not have a specific target for the rupee's exchange rate, but is more concerned with managing excessive volatility.
"We have ensured liquidity, and moving forward, we will remain responsive, agile, and vigilant regarding the banking system's liquidity needs—both short-term and long-term," the RBI Governor stated.
He further indicated that a significant portion of the rupee's decline is attributed to US tariff announcements and global uncertainties, and expressed hope that this situation would stabilize, leading to a decrease in the rupee's value.
These insights followed the RBI’s Monetary Policy Committee (MPC) meeting on Friday, during which the policy rate was decreased by 25 basis points to 6.25 percent, while maintaining a neutral stance.
Malhotra noted that the central bank will continue observing the landscape and will take necessary actions to facilitate credit availability. The interplay of growth and inflation allows the MPC to support economic expansion while remaining focused on keeping inflation within targets.
The central bank has forecasted GDP growth at 6.7 percent for the upcoming fiscal year (FY26). It has set the retail inflation forecast at 4.8 percent for the current fiscal year, reducing it to 4.2 percent for FY26.
Malhotra added that following the income tax reduction, the repo rate cut is expected to further stimulate consumption. The RBI will also closely monitor any depreciation of the rupee that might lead to inflationary pressures.
According to Morgan Stanley, the RBI may introduce additional liquidity measures before the end of March and anticipates another 25 basis points cut in the repo rate in April.
The RBI is fostering growth by easing rates, relaxing regulations (postponing new guidelines), and ensuring adequate liquidity (with expectations of further actions).
