Finance & Stock Market
RBI Can Still Cut Rates Despite Neutral Stance, Says Governor Malhotra
By Neelesh Pandey - 15 Jul 2025 04:08 PM
Reserve Bank of India (RBI) Governor Sanjay Malhotra has clarified that the central bank’s current “neutral” policy stance should not be misunderstood as a signal that interest rates cannot be reduced. Speaking to reporters, Malhotra explained that neutrality gives the RBI flexibility—it can raise or lower rates depending on how inflation and the broader economy behave.
“There seems to be a misconception that a neutral stance only allows us to hold or hike rates,” Malhotra said. “That’s not the case. We can cut rates if the situation demands.” His remarks come at a time when markets and analysts are closely watching for signs of a rate cut amid easing inflation and global monetary shifts.
Since February 2023, the RBI has maintained interest rates, focusing on controlling inflation while monitoring economic growth. Recently, inflation has slowed, increasing expectations that a rate cut might encourage borrowing and investment without exacerbating inflation.
Malhotra stressed that the RBI remains data-driven and won’t rush into decisions. “We will act based on incoming data. Our primary goal is to maintain stability while supporting sustainable growth,” he said. This balanced approach, he added, is what the neutral stance is meant to reflect.
In short, while the RBI hasn’t cut rates yet, it’s keeping the door open. The message is clear: flexibility is key, and decisions will be shaped by how the economy performs in the coming months.
