RBI's Flexible Approach to Monetary Policy

In a recent fireside chat in Mumbai, RBI Governor Sanjay Malhotra emphasized that the Monetary Policy Committee (MPC) maintains a neutral stance, leaving room for future interest rate adjustments. "The neutral stance gives MPC the flexibility to move in either direction or pause," Malhotra stated, highlighting the committee's data-driven approach to decision-making.

Recent Rate Cuts and Economic Support Measures

The RBI has recently implemented a series of repo rate cuts, including a significant 50 basis points reduction in June, to address weak credit demand and support economic recovery. Alongside these cuts, a phased reduction in the cash reserve ratio aims to enhance liquidity and stimulate credit growth.

Economic Indicators and Outlook

Despite these measures, economic momentum remains uneven, with real GDP projected to grow at 6.5% in FY26. Consumer price inflation has moderated, staying within the RBI's target range, allowing for a continued growth-supportive monetary policy stance.

Challenges and Regulatory Focus

The RBI has also flagged emerging risks in microfinance, emphasizing the need for ongoing regulatory monitoring as financial institutions adjust their lending and collection practices.