RBI Board Reviews Economic Outlook Amid Leadership Transition

MUMBAI: The Reserve Bank of India’s (RBI) Central Board convened on December 20, 2024, to assess the global and domestic economic landscape. The meeting, chaired by newly appointed Governor Sanjay Malhotra, marked a significant transition in the central bank’s leadership. The board acknowledged the valuable contributions of former Governor Shaktikanta Das, who completed his extended six-year tenure earlier this month.

Leadership Transition and Economic Challenges

Sanjay Malhotra, a 56-year-old Princeton-educated bureaucrat, assumed office as the 26th Governor of the RBI on December 11, 2024. Prior to this role, Malhotra served as the Revenue Secretary, bringing over three decades of civil service experience to the central bank.

Under Malhotra’s leadership, the RBI faces a complex economic environment characterized by slowing growth and rising inflation. India’s economy grew at its weakest pace in nearly two years, with a 5.4% annual growth rate, while inflation reached 6.2% in October, surpassing the RBI’s target of 4%.

Monetary Policy and Market Reactions

In response to these economic challenges, the RBI’s Monetary Policy Committee (MPC) recently maintained the repo rate at 6.5% but reduced the cash reserve ratio to support growth. This decision aims to balance the need for controlling inflation with the imperative to stimulate economic activity

The leadership change has influenced market dynamics. Following Malhotra’s appointment, the Indian rupee fell to a record low of 84.85 per U.S. dollar, and bond yields dipped, reflecting market expectations of potential rate cuts.

Looking Ahead

As Governor Malhotra navigates these economic challenges, the RBI’s policies will be crucial in steering India toward sustainable growth and stability. The central bank’s focus on maintaining economic stability, implementing policies swiftly, and adapting to global changes will be pivotal in addressing the current economic landscape.

Source: Web Team, C6N