'I am Sanjay, but not of Mahabharat': RBI governor on future rate cuts amid global uncertainties

I am Sanjay but not Sanjay of Mahabharat who can predict future rate actions and at what level rate moderation will stop amid the ongoing global uncertainties, RBI Governor Sanjay Malhotra said on Wednesday.

Malhotra's remarks came at a media briefing on being asked if more interest rate cuts are in the offing, after he delivered the second straight interest rate cut since taking over as the RBI governor.

According to the Mahabharat, Sanjay was blessed with divine vision and used his power to relay actions at the Kurushetra battlefield to blind King Dhritarashtra at his palace.

He further said monetary policy and fiscal policy are acting in tandem to meet the growth-inflation targets.

"It is a joint effort... the government has done its bit in the Budget recently by taking a large number of measures in terms of the increased capex, tax rebates and we have reduced repo rate and changed the stance going forward, which means that the direction of the policy repo rate is downwards.

"Where it will reach… we really don't know. I am Sanjay, but I am not Sanjay of Mahabharat to be able to foresee that far. I do not have the divine vision that he had," he said.

He further said "we will jointly (with the government) try to manage the growth and the inflation dynamics in our country".

Earlier in the day, Malhotra announced repo rate cut for the second consecutive time and signalled more easing ahead as the Reserve Bank of India (RBI) sought to bolster the economy in face of further pressure from damaging US tariffs.

Following the rate cut of 25 basis points, the key policy rate eased to 6 per cent. The move lowers borrowing costs to the lowest level since November 2022, amid easing inflation and a fall in oil prices.

Malhotra also assured that the RBI will maintain sufficient liquidity for speedier rate cut transmission.

We will provide sufficient liquidity for the purposes of monetary policy transmission.