Daijiworld Media Network - Mumbai

Mumbai, Dec 17: Reserve Bank of India (RBI) Governor Sanjay Malhotra has indicated that India’s interest rates are likely to remain low for a prolonged period, supported by strong economic fundamentals and manageable inflation.

In his first interaction with an international media organisation since assuming office a year ago, Malhotra said the rate cuts undertaken during his tenure have helped place the economy in a “Goldilocks” phase—marked by healthy growth and subdued inflation. Speaking at the RBI headquarters in Mumbai, he said current projections suggest interest rates should stay accommodative over the longer term.

India’s consumer price inflation eased sharply to 0.71 per cent in November, well below the RBI’s lower tolerance band. However, the central bank expects inflation to gradually firm up to around 2.9 per cent during the January–March quarter. Meanwhile, GDP growth is projected to moderate to 6.7 per cent in the next financial year’s first quarter, from a robust 8.2 per cent recorded during July–September.

Malhotra noted that the RBI’s growth projections do not yet factor in the potential impact of trade agreements currently being negotiated with the United States and the European Union. If concluded, he said, these pacts could further lift India’s growth trajectory. According to the governor, a trade agreement with the US alone could add up to half a percentage point to GDP growth, while a deal with the EU would also provide an additional boost.

Indian officials have recently indicated that a tariff-reduction agreement with Washington could be finalised before the end of the year, while negotiations with the EU are also in advanced stages.

The economic outlook had faced uncertainty earlier this year after the US imposed steep tariffs on certain Indian exports. However, analysts point out that India’s relatively lower dependence on exports helped cushion the impact. They added that the developments may have accelerated reform measures by the government, including simplification of the GST framework and implementation of new labour codes.

Overall, the RBI remains optimistic that stable monetary policy, combined with structural reforms and improved trade ties, will keep India among the fastest-growing major economies globally.