Reserve Bank Governor Sanjay Malhotra on Friday said the economy is in a better place than the sweet spot it was in two months back, which was described by him as the "goldilocks period".
"We are certainly in the same sweet spot, maybe even better because growth is looking up, growth is looking better, and inflation is the same," Malhotra said, replying to a specific question on the state of the economy and how it compares with what it was in December.
The final decision on the policy rate will be taken by the six-member monetary policy committee, but it hinted that there is a possibility that the repo rate will stay low in such circumstances.
"I do expect that the policy rates should continue to be at low levels for a long period of time. Whether they will go down even further," Malhotra told reporters.
The governor, however, refrained from stating whether the 5.25 per cent level is the terminal rate below which it will not go.
It can be noted that the RBI has cut the key rates by 1.25 per cent over 2025 as it saw some space getting created by inflation, its core objective.
Malhotra said Ram Singh, one of the MPC members, pitched to shift the stance of the policy to "accommodative", while five others opined for it to remain "neutral".
On inflation, the headline CPI number may vary due to factors such as base effects, volatile food prices and also due to the over 0.60 per cent push from the rally in precious metals, he said, stressing that the underlying trends in price-rise and also core inflation are not pointing to any pressures.
From a growth perspective, Malhotra said the trade deal to be signed with the US is among the factors that have led the RBI to up the GDP expansion estimates by 20 basis points over what it was earlier.
To a specific question on declining Indian bets in the US treasury, he said the RBI is not selling US treasury holdings, but added that aspects such as a decline in forex reserves may lead to some movements.
When asked about the government borrowing programme and the markets' concern with the budgeted Rs 17.2 lakh gross borrowing number for FY27, he said that the number is higher because of higher maturities lined up in FY27 and asked everybody to look at the net increase of only Rs 20,000 crore.
On the issue of the yields continuing to remain higher despite the 1.25 per cent cut in policy rates, he said the RBI will provide constant liquidity, which will transmit to all markets, including credit markets, money markets and bonds.
From an "overall" perspective, transmission of the past policy actions has been "excellent", he added.
Malhotra welcomed the government's proactive approach on both the current and capital accounts through its moves like opening up the insurance sector for foreign direct investment.
The move to give a tax holiday for data centres will ensure higher investments in the sector, he added.
With concerns on the high credit-deposit ratio at banks dominating discussions, he said this is a cyclical phenomenon and added that, more than that, other aspects like liquidity coverage ratio and net stable funding ratio matter more for the RBI.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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