RBI leans towards growth as Governor Malhotra backs rate cut

The Reserve Bank of India (RBI) appears to be leaning towards prioritising economic growth, according to the minutes of the Monetary Policy Committee (MPC) meeting held on April 9, which were released on Wednesday. RBI Governor Sanjay Malhotra said current economic conditions are suitable for monetary easing. With inflation close to the 4% target and growth still moderate, Malhotra said policy should now focus on boosting domestic demand to maintain and speed up momentum.

The MPC voted unanimously to cut the policy rate by 25 basis points and shift the stance to accommodative, showing the central bank’s rising confidence in managing inflation. Malhotra said, “Coming to the imposition of tariffs, in my view, the implications for inflation are two-sided. On the upside, uncertainties may lead to possible currency pressures resulting in imported inflation. On the downside, a slowdown in global growth will further soften commodity and crude oil prices, which would ease the pressure on inflation.” His remarks indicate a balancing act between external risks and domestic goals, with more attention now being paid to the latter.

Supporting a rate cut, Malhotra said, “Going forward too, considering the evolving growth-inflation trajectories, monetary policy needs to be accommodative.”


A research note by Barclays described the minutes as ‘dovish’ and pointed to the RBI’s continued liquidity actions since the April 9 meeting. These include bond purchases worth ₹40,000 crore and long-term variable rate repo operations totalling ₹1.5 lakh crore. Additionally, changes to the liquidity coverage ratio (LCR) framework, set to take effect from April 2026, are expected to release ₹1 lakh crore of loanable funds into the banking system.

Among MPC members, Nagesh Kumar said it is necessary to stimulate private consumption and investment using both fiscal and monetary tools, especially amid ongoing global uncertainty. He referred to a downgraded growth outlook for 2025-26 and warned that instability in global markets could affect foreign direct investment and private capital expenditure. He said the recent drop in inflation creates space for a more accommodative approach.

Saugata Bhattacharya spoke of the risks from global trade disruptions and said it was important to support growth to handle possible external shocks. He said that unless trade tariffs are reduced, both global trade and India’s growth might suffer. However, he did not call for aggressive policy changes, pointing instead to the continued strength of domestic economic activity. He added that the RBI’s liquidity steps would help pass on interest rate cuts to the broader economy.