RBI Guv Malhotra signals rates to stay low for 'long period': Report

The Reserve Bank of India's (RBI) projections suggested rates "should remain low for a long period of time, governor said

India's central bank governor Sanjay Malhotra expects the country's interest rates to remain low for a "long period", he told the Financial Times in an interview published on Wednesday.

The Reserve Bank of India's (RBI) projections suggested rates "should remain low for a long period of time", Malhotra told the newspaper.

Malhotra said the RBI's economic forecast had not taken into account the potential effect of trade agreements currently under negotiation, which if sealed would raise India's economic growth.

"The impact of the US trade deal could be as much as about half a percentage point," he told the FT.

 

Malhotra told the FT that the most recent headline GDP figure "was surprising" and that the RBI, which had predicted 7 per cent annual growth in the July-September quarter had to "improve our forecasting".

The South Asian economy expanded at a sharper-than-expected clip of 8.2 per cent in the July-September quarter, but growth is expected to slow as the full impact of up to 50 per cent tariffs imposed by the US hit exports and sectors from textiles to chemicals.

The world's fifth-largest economy is under pressure from punitive tariffs imposed by US President Donald Trump, widening its trade deficit and pushing its currency to a record low.

Earlier in December, India's central bank cut its key repo rate by 25 basis points and left the door open for further easing as it took steps to boost banking-sector liquidity by up to $16 billion to support a "goldilocks" economy.