With Inflation Below 3.7%, RBI Unlikely To Change Rates

2025-07-16 02:18:27

(MENAFN- KNN India) New Delhi, July 16 (KNN) India's central bank expects headline inflation to remain below 3.7 percent for the current financial year, Reserve Bank of India (RBI) Governor Sanjay Malhotra said in an interview with CNBC-TV18 on Tuesday.

The assessment comes as inflationary pressures ease, supported by a decline in food prices and a stable macroeconomic environment.

“Inflation is expected to stay below 3.7 percent for the full year,” Malhotra stated, adding that the Monetary Policy Committee (MPC) will base future rate decisions on the broader inflation outlook rather than immediate price movements.

His remarks follow the release of June consumer price index (CPI) data, which showed annual retail inflation slowing to 2.10 percent-the lowest level in over six years.

The June inflation figure was near the lower bound of the RBI's 2-6 percent tolerance band, prompting economists to anticipate another rate cut in the second half of the fiscal year, should disinflationary trends persist.

The governor also revealed that a revised liquidity management framework is in the works and expected to be finalised by the end of July.

Reaffirming the central bank's monetary policy stance, Malhotra emphasised that the RBI continues to target the interbank call money rate as its operating benchmark.

“The call money rate is our clear operating target. We are not considering the TREPS rate or the market repo rate for this purpose,” he said.

The aim, he added, is to maintain the call rate as close to the policy repo rate as possible, to ensure effective policy transmission.

TREPS refers to the tri-party repo system, a short-term money market instrument used by a broader set of financial participants beyond banks.

In addition, the RBI is currently reviewing regulations related to bank ownership.

The RBI's outlook and evolving policy stance come amid a broader environment of macroeconomic stability, with inflation under control and expectations of steady growth.

(KNN Bureau)

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