RBI's latest monetary policy exudes over confidence and high optimism

Governor Sanjay Malhotra continues repo rate cut trend with gusto

- BY ANJAN ROY

The new governor of the Reserve Bank, Sanjay Malhotra, has taken to monetary policy formulation and the world of finance like fish to water. Within a short period of his taking over, Malhotra has got into his charge with a refreshing confidence.

RBI's monetary policy, announced on Friday June 6, is surprisingly breezy and introduces a reset policy with aplomb. He says he has worked on the basis of a 5x3x3 matrix. That starts on a new and quite optimistic note.

He states: “This 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace.”

The fundamental point is that the Indian economy presents “a picture of strength, stability and opportunity”. What are these. First, according to RBI, the strong balance sheets of five sectors, namely, corporates, banks, households, government and external sector.

Second, there is stability on all three fronts ~ price, financial, and political - providing policy and economic certainty in this dynamically evolving global economic order.

Third, the Indian economy offers immense opportunities to investors through 3Ds~ demography, digitalisation and domestic demand

On the basis of these fundamentals, Malhotra has delivered a blockbuster combination of a 50 basis point reduction in repo rate and 100 bps reduction in CRR. With the back to back reductions in repo rates since February 2025, the total cut in repo rate would be 1.50 per cent.