Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that the benchmark interest rate reduction will bolster private consumption and support a revival in private corporate investment.
His remarks came while voting for a 25 basis points cut in repo rate along with other five members of the rate-setting panel earlier this month, as per the minutes of the MPC meeting released by the RBI on Wednesday.
Advertisement
Governor Malhotra-headed Monetary Policy Committee (MPC) had reduced the short-term lending rate by 25 basis points to 6 per cent on April 9. A similar reduction was done in February.
“When consumer price inflation is decisively around its target rate of 4 per cent and growth is still moderate and recovering, monetary policy needs to nurture domestic demand impulses to further increase the growth momentum. This is specially so amidst an uncertain global environment, which has amplified downside risks to growth,” the governor said.
Going forward too, considering the evolving growth-inflation trajectories, monetary policy needs to be accommodative, he added.
Notably, RBI’s latest liquidity-boosting measures on Tuesday led banking stocks surge to record highs. The Bank Nifty index climbed to an all-time high of 55,961 on April 22, extending a six-day winning streak amid growing confidence in the sector.
On the global shocks, the governor said the global economic landscape remains in a state of flux amidst heightened trade and policy uncertainties, with attendant implications for economies across the world, posing complex challenges and trade-offs in policy making.
“The channels through which these global shocks could impact economies, particularly emerging market economies, include spillovers from global growth slowdown, elevated financial markets volatility and dented consumer and investor confidence.”
The next meeting of the MPC is scheduled from June 4-6, 2025.
