RBI sees more room to ease rates as inflation hits record low: Sanjay Malhotra 

Reserve Bank of India (RBI) Governor Sanjay Malhotra signaled the possibility of a further policy rate cut, saying there is still room for easing even after the 100 basis point reduction earlier this year. 

"At the last MPC (monetary policy committee) meeting in October, it was communicated clearly there is room to cut policy rates," Malhotra said in an interview with Zee Business. “Since then, the macro-economic data we have received has not indicated that the room to lower rates has decreased.” 

The central bank has held rates steady since August, but softer inflation could pave the way for fresh cuts. India’s retail inflation plunged to a record low of 0.25% in October, largely due to falling food prices and tax relief on consumer goods. Minutes from the October meeting echoed the dovish tone, with members citing space for future rate easing amid a more favorable inflation outlook. 

However, whether a rate cut will materialise at the next MPC meet remains uncertain. “There is certainly room (to lower rates) but whether the MPC takes a call on that in the coming meeting or not, depends on the committee,” Malhotra noted. 

Meanwhile, the Indian rupee’s slide to an all-time low of 89.49 against the US dollar has drawn attention. It has weakened over 4% this year, putting it among Asia’s worst-performing currencies. 

Malhotra described the decline as part of a broader trend. “The rupee’s long-term trajectory is guided mainly by inflation differentials. A mild depreciation over time is natural,” he said, adding that the RBI does not defend any specific exchange level but focuses on managing volatility. 

“Historically, the rupee has weakened around 3 per cent a year,” he pointed out. “Our aim is to ensure volatility stays contained so that businesses can plan without uncertainty.”