Sanjay Malhotra declares RBI has won the 'battle against inflation' but...

Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday said price stability will be the the primary concern for the central bank amid cooling retail inflation, despite it winning the “battle” against it.

CPI headline inflation was pegged at 2.10 per cent in June 2025, making it the lowest year-on-year inflation after January 2019. The RBI's inflation target falls within 4 per cent, with a tolerance for plus or minus 2 per cent.

Speaking during a fireside chat at a Financial Express event on Friday, Malhotra said the RBI had won the battle against inflation, but had an advice of caution.

“The battle against inflation is won, but war continues,” Malhotra said at a banking summit organised by the newspaper in Mumbai.

On June 6, RBI Governor Sanjay Malhotra-headed six-member monetary policy committee reduced the benchmark short-term lending rate by a larger-than-expected 50 basis points. This took the total reduction in repo rates to 100 bps in quick succession.

However, the central bank shifted its stance to “neutral”, suggesting limited room for further easing.

“Our primary objective to maintain price stability and we have mentioned that it is not inconsistent with the other objectives we have of growth because that is a pre-requisite,” the RBI governor said.

He shared that the monetary policy committee's (MPC) decision will be guided by the revised forecast numbers rather than current levels. The next RBI MPC decisions will be announced on August 6.

However, with retail inflation falling to a six-year low and likely to hit a record low in July, calls have grown for at least one more rate cut this year.

RBI Guv explains ‘neutral’ stance decision

Sanjay Malhotra further explained that the RBI MPC's change of stance from ‘accommodative’ to ‘neutral’ did not mean it will take a U-turn from the easing of policy.

“We have the flexibility to move up, down or pause. Yes, it does mean, the bar for further easing is higher than it would have been if it (stance) was accommodative,” the RBI Governor said.

The central bank forecasts inflation for the current fiscal year that started on April 1 at 3.7 per cent.