The Reserve Bank of India (RBI) is not thinking about raising interest rates at the moment, Governor Sanjay Malhotra has said. Speaking to ET Now, he said it was too early to discuss rate hikes and that the central bank would continue to closely monitor inflation and global developments before making any decision.
His comments come at a time when investors and economists are watching how rising oil prices and global uncertainties could affect India’s inflation outlook.
Malhotra said the RBI is keeping an eye on whether higher oil prices start affecting the prices of other goods and services across the economy. According to him, such broader inflationary pressure has not appeared so far.
He said the RBI had not yet observed signs of inflation spreading across the broader economy, indicating that the impact of higher oil prices had not become widespread.
The RBI’s Monetary Policy Committee (MPC) had kept the benchmark interest rate unchanged at its policy meeting earlier this month. It also retained its policy stance as “neutral”.
The made it clear that the central bank is not preparing markets for higher interest rates.
He said that if the RBI wanted to signal future rate increases, it would have changed its policy stance from neutral to restrictive. Since that has not happened, discussions about rate hikes are premature.
Malhotra added that the MPC would continue to assess economic conditions and take decisions on a meeting-by-meeting basis rather than following a fixed path.
Speaking about global risks, Malhotra said currency movements and external uncertainties remain major concerns for policymakers.
However, he noted that easing tensions in West Asia is a positive development. Lower geopolitical tensions could help reduce pressure on oil prices and financial markets, which in turn would support economic stability.
The Governor said the initial response to the RBI’s recent measures aimed at supporting the Indian rupee has been encouraging.
He expressed confidence that India would continue to receive healthy foreign inflows. According to him, movements in the foreign exchange market have remained orderly after the steps taken by the central bank to curb excessive speculation.
Malhotra also highlighted that India’s foreign exchange reserves remain at comfortable levels.
He said the RBI’s reserve management strategy is based on three key principles — safety, liquidity and returns. The central bank believes the current reserve position provides adequate protection against external shocks.
The Governor also spoke about gold holdings, saying they form an important part of the country’s foreign exchange reserves and contribute to safety and liquidity when needed.
Malhotra said the RBI is working on additional measures to make investing in India easier. He also welcomed the possibility of Indian government bonds being included in global bond indices such as those maintained by Bloomberg or other index providers.
Such inclusion could attract more foreign investment into India’s debt market and improve the country’s integration with global financial markets.
For now, the RBI’s message remains clear: inflation risks are being watched carefully, but there is no immediate move towards higher interest rates. Future decisions will depend on how inflation, oil prices and global economic conditions evolve in the coming months.