Better than 'goldilocks' period? RBI Governor says growth looking up; rates to remain low

NEW DELHI: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said the Indian economy was now in an even better position than it was two months ago, when he had described it as being in a “Goldilocks period”, a phase marked by balanced growth and stable inflation.

Speaking to reporters, Malhotra said growth prospects have improved while inflation remains under control. “We are certainly in the same sweet spot, maybe even better because growth is looking up, growth is looking better, and inflation is the same,” he said, comparing the current situation with December.




Malhotra also indicated that borrowing costs could remain low for some time. “I do expect that the policy rates should continue to be at low levels for a long period of time,” he said.

On inflation, Malhotra said headline consumer price index (CPI) numbers may fluctuate due to factors like base effects, changing food prices, and rising precious metal prices. However, he stressed that core inflation and underlying trends do not show signs of sustained price pressure.

On growth, he said a proposed trade agreement with the United States was one of the reasons the RBI raised its GDP growth forecast by 20 basis points. He also clarified that the RBI is not selling its US Treasury holdings, though foreign exchange reserve changes can affect such positions.

Addressing concerns over the government’s planned gross borrowing of Rs 17.2 lakh crore for FY27, Malhotra said the higher number reflects repayments due that year. He noted that the net increase in borrowing is only about Rs 20,000 crore.

He added that the RBI will continue to ensure sufficient liquidity in the financial system so that earlier rate cuts fully benefit credit markets, bonds, and businesses.

Malhotra also welcomed government reforms such as allowing more foreign investment in insurance and offering tax benefits for data centres, saying these steps would encourage investment. On the issue of banks’ high credit-deposit ratio, he said this is a cyclical trend and that the RBI focuses more on broader financial stability indicators like liquidity coverage and funding ratios.