Mumbai, July 15, 2025 — Reserve Bank of India (RBI) Governor Sanjay Malhotra has indicated that the central bank may consider additional interest rate cuts if inflation continues to decline or if economic growth shows signs of weakening. Speaking in an interview with CNBC-TV18, Malhotra emphasized that the Monetary Policy Committee (MPC) remains data-dependent and will assess evolving macroeconomic conditions before making further decisions.
“If inflation is lower than our forecast or if growth remains subdued, certainly the policy rates can be cut,” Malhotra stated, reaffirming the RBI’s neutral stance which allows flexibility in either direction. The remarks come shortly after India’s retail inflation dropped to a six-year low in June, driven largely by easing food prices.
The RBI has already implemented a cumulative 100 basis point reduction in the benchmark repo rate since February, including a surprise 50 basis point cut in June. The current repo rate stands at 5.5%, with the central bank shifting its policy stance from accommodative to neutral to better respond to changing economic dynamics.
Malhotra stressed that while price stability remains the RBI’s primary mandate, supporting growth is equally critical. “Both are important, and we are not prioritizing one over the other at this point,” he said. He also noted that inflation for FY26 could undershoot the RBI’s projection of 3.7%, providing further room for policy easing.
In addition to monetary policy, the RBI is reviewing its bank ownership norms, including the possibility of allowing foreign banks to hold up to 26% stake in Indian lenders. Malhotra confirmed that an internal committee has also completed a review of the central bank’s liquidity management framework, with findings expected to be published later this month.
The next MPC meeting is scheduled for August 4–6, and market participants are closely watching whether the recent inflation dip will prompt another rate cut. Bond yields remained steady at 6.32%, while the rupee strengthened slightly to 85.82 against the dollar following Malhotra’s comments.
