New RBI governor Sanjay Malhotra says need to ensure stability, continuity in policy
- As we have to be conscious of the fact that we do maintain continuity and stability, we cannot be stuck to it, and we have to be alert and agile to meet challenges, says Sanjay Malhotra in his first comments after taking charge as RBI governor.
Mumbai: The new Reserve Bank of India governor Sanjay Malhotra has started out by emphasizing the need to ensure stability and continuity in policy making, while remaining “alert and agile” amid the current global and political uncertainties.
“All businesses, all people, they do need this (policy) continuity and stability rather than (a) day-to-day kind of a policy,” Malhotra said at his first press conference after taking charge as the RBI governor on Wednesday. “As we have to be conscious of the fact that we do maintain continuity and stability, we cannot be stuck to it, and we have to be alert and agile to meet challenges.”
Malhotra was the revenue secretary before replacing Shaktikanta Das as the 26th RBI governor.
Sanjay Malhotra's first remarks as new RBI Governor
Citing the theme of RBI's 90th year celebration, Malhotra called ‘stability, trust and growth’ as his three main priorities. His comments were also interspersed with references to themes that the central government has been focusing on over the years.
“Ours is an economy that needs to develop as we are entering in this Amrit Kaal and to realize the vision of Viksit Bharat as in 2047. There is huge responsibility that we have in ensuring the growth that this country actually has, that continues,” he said.
In his brief statement, Malhotra stressed that the central bank will continue interacting with all segments, including financial regulators, state governments and the Centre, to continue the RBI's legacy. “We do not have a monopoly of all knowledge,” he said, stressing the importance of wide consultations with other stakeholders.
“One of the most important roles of the central bank here is to spread financial inclusion,” said Malhotra. “We have of course travelled a lot in financial inclusion, specially with regards to making available and accessible banks to the doorsteps of each and every nook and corner of the country. But there is still more to be done.”
The change of guard at the RBI comes when the economy is facing headwinds. Growth in the July-September quarter dipped unexpectedly to a seven-quarter low of 5.4%, putting pressure on the central bank to reduce policy rates. While inflation is expected to ease in November, it remains well above the central bank’s target of 4%. The rupee has been under pressure following the US elections, with foreign portfolio investors selling stocks.
Malhotra's appointment comes months after the government appointed three new external members to the MPC. With new external members, a new governor, and a new deputy governor who is yet to be appointed, the committee's February meeting will be keenly watched.
Analysts are expecting a rate cut in the February monetary policy review, going by the past actions of RBI governors who had moved from finance ministry earlier. Das had delivered a 25-basis-point cut in repo rate in his first policy review after taking charge as the governor. A basis point is a hundredth of the percentage point.
Also Read: From North Block to Mint Street: Sanjay Malhotra has his task cut out as RBI’s next governor
“We believe the market will move to price in a very high probability for a cut in the February meeting, while also moving down the pricing for the terminal rate – 75bp is likely to quickly become the market expectation we believe (from 60bp presently),” said Nomura in its report.
Malhotra's appointment has come as a surprise and has left markets guessing about the future trajectory of policy.
While equity and bond markets remained flat post the announcement, the rupee hit a low of 84.86 during trade on Tuesday. It closed lower at 84.84 on Wednesday.
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Business NewsEconomyNew RBI governor Sanjay Malhotra says need to ensure stability, continuity in policy
First Published:11 Dec 2024, 04:52 PM IST
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