RBI Governor Sanjay Malhotra Advocates for Flexible Monetary Policy Adjustments

Monetary Policy Adjustments for Economic Flexibility

Mumbai: Sanjay Malhotra, the Governor of the Reserve Bank of India (RBI), indicated that shifting the monetary policy stance to neutral would grant the central bank the necessary flexibility to adjust the policy rate—whether to cut, pause, or increase it—based on changing domestic and international economic landscapes, as revealed in the minutes from the recent rate-setting panel meeting released on Friday.

During a meeting on June 6, the six-member panel led by the RBI Governor decided to lower the benchmark short-term lending rate by 50 basis points, marking a cumulative reduction of 100 basis points in a short timeframe, alongside a shift in the policy stance from accommodative to neutral.

"This set of measures aims to instill some certainty amid uncertainty and is anticipated to bolster growth," Malhotra remarked during the three-day Monetary Policy Committee (MPC) meeting.

While five members supported a 50 basis point reduction in the repo rate, an external member, Saugata Bhattacharya, proposed a more modest cut of 25 basis points.