New Delhi/Mumbai, 06 February (H.S.): Reserve Bank of India Governor Sanjay Malhotra announced on Friday that the key policy repo rate will linger at subdued levels for an extended duration, with potential for additional cuts ahead, even as the Monetary Policy Committee (MPC) opted to hold it steady at 5.25 percent while retaining a neutral stance.

In his post-policy press conference, Malhotra emphasized: Policy rates will remain at lower levels for a long period of time, and they may decline even further. He cautioned, however, that ultimate decisions rest with the MPC. Since last year, the central bank has cumulatively slashed the repo rate by 125 basis points.

Transmission to deposits has lagged, the Governor noted, forecasting imminent declines in fixed deposit (FD) rates. On India's recent free trade pacts, he projected a modest 0.20 percentage point boost to GDP growth when combined with other tailwinds.

Treasury bill yields will aid in calibrating government borrowing costs, enabling New Delhi to secure ₹11.73 lakh crore in net funds at reasonable levels; data center incentives in the Budget are poised to magnetize substantial foreign direct investment.

Currency in circulation has also surged notably over the past year.Deputy Governor T. Rabi Shankar affirmed the RBI's capacity to deftly handle the government's borrowing calendar, pegging gross borrowings for FY 2026-27 at ₹17.2 lakh crore and net at ₹11.73 lakh crore.

The decision underscores the RBI's revised upward GDP growth projections for Q1 and Q2 of FY 2026-27, balancing domestic resilience against global headwinds while prioritizing stability.

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Hindusthan Samachar / Jun Sarkar