RBI to remain ‘agile and proactive’ in its policy actions amid ongoing tariff war: Sanjay Malhotra

"In view of the rapidly evolving situation, especially on the global front, we are continuously monitoring and assessing the economic outlook. We will be agile and proactive in our actions on the policy front, as always," RBI Governor said, while addressing the 24th FIMMDA-PDAI Annual Conference in Bali

New Delhi: Amid the ongoing tariff war, Reserve Bank Governor Sanjay Malhotra has said that the central bank will continuously monitor the rapidly evolving global situation and remain ‘agile and proactive’ in its policy actions.

Observing that the Indian economy and the financial markets have demonstrated remarkable resilience, Malhotra cautioned that “they are not immune to the vagaries of an uncertain and volatile global environment.” “In view of the rapidly evolving situation, especially on the global front, we are continuously monitoring and assessing the economic outlook. We will be agile and proactive in our actions on the policy front, as always,” he said, while addressing the 24th FIMMDA-PDAI Annual Conference in Bali on Friday.

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He said the growth-inflation balance has improved significantly and there has been a decisive improvement in headline inflation which is projected to remain aligned to the target of 4 per cent in FY26. Global uncertainties and weather disturbances, however, pose risks to the inflation outlook.

“Even though we have projected a somewhat lower real GDP growth for FY26 at 6.5 per cent, India is still the fastest growing economy. Yet, it is much below what we aspire for. We have reduced repo rates twice and provided sufficient liquidity,” he said.

On the Indian financial markets, the Governor said all market segments including FX, G-sec, Money Markets, have largely remained stable. While the rupee came under a bit of pressure a few months ago, it has fared better thereafter and regained some lost ground, he noted.

Equity markets experienced significant correction, as capital outflows accelerated, a trend seen in most emerging markets. The government securities market has, however, remained rock-steady throughout the year.

The gross market borrowings of the central and State governments, totalling Rs 24.7 lakh crore in FY 2024-25, sailed through smoothly, he said. The cost of borrowing for the central government came down by 28 basis points to 6.96 per cent in FY25, from 7.24 per cent in FY24. The secondary market in g-secs continued to be deep and active, partly aided by India’s inclusion in global bond indices, he added.

In India, Malhotra said markets have evolved within a regulated framework, adapting to changing regulatory philosophies and approaches. He also emphasised that the foreign exchange markets are reasonably liquid with narrow bid-ask spreads and there is growing transparency in this market.