RBI Governor: Rate Hikes Premature Amid Global Uncertainty

Reserve Bank of India Governor Sanjay Malhotra has indicated that it is too early to consider future interest rate increases, citing persistent global geopolitical uncertainties. He noted that the central bank's neutral monetary policy stance, maintained since its June 3-5 meeting, reflects this elevated uncertainty, rather than a definite path toward tightening.

The Governor highlighted that global crude prices, a significant factor for India's import-dependent economy, have eased following recent international truce talks. However, he cautioned that the situation remains fragile and supply restoration will take time. The RBI is also closely watching monsoon rainfall, which as of June 22, was 43% below normal and could impact agricultural output and rural demand.

Malhotra also addressed the Indian rupee, which had previously hit a record low near 97 per dollar. He affirmed that the rupee's movement is market-determined, but the RBI is prepared to intervene to curb excessive volatility. Measures introduced in June, including allowing foreign-currency deposits and easing investment rules, have helped stabilize the currency. India is also hopeful for inclusion in the Bloomberg Aggregate Bond Index.