RBI Governor Sanjay Malhotra Declares Inflation Battle Won, Focus Shifts to Growth Outlook

Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that the central bank has “won the battle against inflation,” though the broader war is still ongoing, with price stability remaining the primary objective. Speaking at a Financial Express event on Friday, Malhotra emphasized the importance of maintaining vigilance as monetary policy shifts its focus toward future growth and inflation projections, ahead of the next policy review on August 6.

At its June meeting, the RBI surprised markets with a 50 basis point rate cut, exceeding expectations, but simultaneously shifted its stance to “neutral,” signaling limited space for further easing. Malhotra clarified that this change in stance does not imply a halt in easing measures but rather raises the threshold for additional rate cuts compared to an accommodative stance. With retail inflation falling to a six-year low and possibly reaching a record low in July, there have been increasing calls from analysts for at least one more rate cut, although many caution that this disinflation may reflect weakening demand in the economy.

Malhotra noted that the quicker transmission of monetary policy, driven by front-loaded rate cuts, is already aiding economic growth by improving the flow of funds to industry. He reassured that the central bank retains ample tools to respond to evolving economic conditions. “We have the flexibility to move up, down or pause,” he said, underlining that the RBI remains equipped to act as needed to support stability and growth.

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