Mumbai, April 8 Reserve Bank Governor Sanjay Malhotra expressed confidence on Wednesday that interest rates will remain low in the medium to long term, given the benign inflationary conditions.
Addressing the media at a post-monetary policy conference, Malhotra said the Indian economy is very strong, resilient, and robust.
"We are in a neutral state...the possibility of either outcome cannot be ruled out, that low rates (would) continue for a long time," he said.
Despite shocks, he said, the RBI is projecting a GDP growth of 6.9 per cent for the current financial year.
"Structurally, in the long term, macroeconomic fundamentals, because of various measures taken by the government, the RBI, and various institutions, remain very strong and continue to drive growth on one hand, and at the same time, contain price pressures," he added.
"Therefore, it is quite possible that even in the short to medium term, we will continue to have low rates," he concluded.
Earlier in the day, the Reserve Bank of India kept its key policy rate unchanged, adopting a cautious wait-and-watch stance as policymakers assessed the impact of the six-week-long Iran conflict on energy supplies, inflation, and growth.
The central bank's six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee, and disrupted trade flows.
Malhotra also emphasised that the ceasefire has been taken into account in the monetary policy review.
The US has agreed to a two-week ceasefire with Iran, President Donald Trump announced 90 minutes before his deadline to wipe out the Iranian civilisation was to end.
Trump made the dramatic announcement on Tuesday evening (US time) even as Democrats called for his removal over unhinged threats to wipe out the Iranian civilisation.
On GDP growth, the RBI projected a 6.9 per cent expansion of the Indian economy in the current financial year, lower than the expected 7.6 per cent growth in FY26. Inflation is estimated at 4.6 per cent for 2026-27 (April 2026 to March 2027), which is within the RBI's 2 per cent to 6 per cent target range.
With regard to the transmission of a series of rate cuts by the RBI, Malhotra said banks have passed on about 90 basis points reduction on the lending side against 125 basis points moderation in the repo rate.
"Similarly, on the deposit side, it is more than 100. So, there has been a satisfactory transmission," he said.
Asked about measures taken on currency market curbs, he said these steps were taken to check excessive volatility of the rupee, and these are not in any sense a structural change.
"We stand committed to the development, broadening, and deepening of these markets...obviously, these are not measures which are going to remain there forever," he said.
These measures were taken in view of heightened volatility in the forex market in the last few weeks of last month, he added.
