Mumbai, July 15, 2025 — Reserve Bank of India (RBI) Governor Sanjay Malhotra has signaled the possibility of additional interest rate cuts if inflation continues to ease or if economic growth falters. In an interview with CNBC-TV18, Malhotra emphasized that the central bank’s Monetary Policy Committee (MPC) remains data-driven and will respond to evolving macroeconomic indicators before making further decisions.
“If inflation is lower than our forecast or if growth remains subdued, certainly the policy rates can be cut,” Malhotra stated, reaffirming the RBI’s neutral stance, which allows flexibility in either direction. His comments follow a significant drop in retail inflation to a six-year low of 2.10% in June, largely attributed to falling food prices.
Since February, the RBI has implemented a cumulative 100 basis point reduction in the benchmark repo rate, including a surprise 50 basis point cut in June. The current repo rate stands at 5.5%, with the central bank shifting its stance from accommodative to neutral to better navigate economic uncertainties.
Malhotra stressed that both price stability and growth are equally important. “We are not prioritizing one over the other at this point,” he said, adding that inflation for FY26 could undershoot the RBI’s projection of 3.7%, potentially opening up more policy space.
The Governor also addressed broader regulatory reforms, including a review of bank ownership norms. He indicated that the RBI may allow foreign banks to hold up to 26% stake in Indian lenders, subject to policy deliberations.
The next MPC meeting is scheduled for August 4–6, and market participants are closely watching whether the recent inflation dip will prompt another rate cut. Bond yields remained steady at 6.32%, while the rupee strengthened slightly to ₹85.82 against the dollar following Malhotra’s remarks.
