Indian Reserve Bank (RBI) Governor Sanjay Malhotra said on Friday that after the announcement of a 0.50 per cent reduction in policy rate repo, there is a very little scope for further reduction. It was decided to reduce the repo rate to 5.5 percent in the RBI’s Monetary Policy Committee meeting. With this, the Reserve Bank has cut the repo rate by one percent from February till now. Malhotra told reporters after the announcement of the bilateral monetary policy that the future monetary policy action would depend on the coming figures.
Repo rate reduced scope
He said, “Given the current circumstances, there is now a very limited scope for monetary policy. We are estimated to be 3.7 percent of inflation this year and more than four percent for next year. If all this happens, then there is a very limited scope for rate cuts. “He said,” We will continue to keep an eye on the upcoming figures and mainly take the same steps that the figures will suggest us. “After the latest cuts, the repo rate has come to the lowest level of the last three years. The RBI governor hoped that the interest rate cuts would have a positive impact on the economic growth. However, he said that its impact will be seen in the second half of FY 2025-26.
Customers will get fast benefit
He said that compared to previous trends, this time the conversion of a major policy rate cut at customer level will be much faster. In the context of inflation, Malhotra said that it can be believed that the RBI has won the battle against price growth. He told reporters that the aspirational growth rate for India is 7-8 percent annually. He also announced to turn the attitude of monetary policy from ‘generous’ to ‘neutral’. Malhotra said, “Neutral stance will mean that it (repo rate) can go in any direction. This will depend on how the figures live. If the growth is weak, it may go down further. If the growth is good, inflation is increasing, it may mean that the repo rate increases. This will depend on how the figures of both inflation and growth are revealed.
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