Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that it is “premature” to discuss the possibility of interest rate hikes, emphasising that monetary policy decisions will continue to be driven by incoming economic data amid elevated global uncertainty.
Speaking to ET Now, Malhotra explained that the RBI’s decision earlier this month to maintain a neutral policy stance reflects the current uncertain macroeconomic environment.
He clarified that if the central bank had intended to signal rate hikes, it would have shifted its stance from neutral to restrictive.
The fact that it did not do so, he said, clearly indicates that policymakers are not preparing the market for any immediate tightening.
His remarks come against the backdrop of easing global crude oil prices following a ceasefire between Iran and Israel and ongoing diplomatic efforts involving the United States and Iran.
Since India imports nearly 90% of its crude oil requirements, lower oil prices are generally positive for inflation management and macroeconomic stability.
However, the RBI Governor cautioned against assuming that risks have fully subsided. He noted that the geopolitical situation remains fragile and that it will take time for global oil supply chains to normalise.
While upside risks to crude prices have reduced, he stressed that the central bank is still monitoring developments closely before drawing conclusions.
The RBI’s Monetary Policy Committee (MPC), in its June 3–5 meeting, kept the benchmark repo rate unchanged at 5.25% and retained a neutral stance.
Meeting minutes indicated that policymakers expect improved economic conditions following the end of hostilities in West Asia.
Malhotra reiterated that inflation remains a key concern, especially the potential pass-through of energy price shocks into broader price levels.
He said there are currently no signs of inflation becoming widespread, and policy decisions will continue to be taken on a “meeting-by-meeting” basis.
He also highlighted that the RBI is closely tracking both crude oil price movements and monsoon progress, noting that both variables carry significant implications for inflation trends.
On external sector stability, Malhotra described the recent easing of geopolitical tensions in West Asia as a positive development.
He added that currency markets have remained stable after RBI interventions to curb excessive volatility.
According to him, the initial impact of measures taken to support the rupee has been encouraging, with expectations of healthy foreign inflows going forward.
The foreign exchange market, he said, has shown orderly movement after steps were taken to discourage speculative trading.
Keywords:
1. RBI interest rates
2. Sanjay Malhotra
3. monetary policy stance
4. inflation outlook India
5. crude oil prices India
