RBI monetary policy hasn't lost sight of growth amid inflation targeting, Governor Sanjay Malhotra says

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The Reserve Bank of India has not “lost sight” of its growth objective, even as inflation targeting remains its primary mandate, Governor Sanjay Malhotra said on Monday.

RBI Governor Sanjay Malhotra. The central bank kept its repo rate unchanged in its August monetary policy meeting.(PTI)

“The primary objective of monetary policy in terms of price stability has significantly contributed in the strength of India’s micro fundamentals,” Malhotra said at a banking industry event in Mumbai. “At the same time, monetary policy has not lost sight of its objective of growth.”

Malhotra’s remarks come just two days before the US enforces President Donald Trump’s additional 25% tariff hike on Indian imports, which would take cumulative levies to 50%—among the highest on any major economy’s products—and could shave 0.6 to 0.8 percentage points off India’s annual growth, according to Citigroup Inc. estimates.

To cushion the tariff shock, the central government is exploring ways to bolster the domestic economy. Prime Minister Narendra Modi announced earlier this month plans to overhaul the complex goods and services tax, a move aimed at boosting consumer spending.

RBI left the repurchase rate unchanged at its August policy meeting, as policymakers sought to assess the impact of tariff-related uncertainties on Asia’s third-largest economy. Before that, the central bank had lowered the benchmark rate by 100 basis points since February.

However, benign inflation may give policymakers scope to ease further in the coming months if growth falters. In July, the inflation rate fell below the central bank’s target band for the first time in eight years.

With inputs from Bloomberg and PTI.

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