A Rare Goldilocks Period: RBI's Transformative Year Under Malhotra

The Reserve Bank of India, under Governor Sanjay Malhotra, has experienced a 'rare Goldilocks period' with significant rate cuts due to low inflation, robust growth despite challenges, and strategic regulatory relaxations to boost economic growth. The actions have impacted banking but aimed to maintain financial stability.

The Reserve Bank of India (RBI), led by Governor Sanjay Malhotra, enacted a substantial monetary easing in 2025, reducing key rates by 1.25% over four policy reviews due to record low inflation, marking what Malhotra termed a 'rare Goldilocks period' for the Indian economy.

Despite global economic headwinds, India witnessed over 8% growth, while inflation remained under 1%. Malhotra anticipates a moderation in growth with inflation approaching the target 4% rate, framing RBI's proactive rate cuts as part of broader efforts to sustain economic dynamism.

Under Malhotra, the RBI introduced 22 regulatory measures in October, including unconventional moves that emphasized financial stability while considering economic expansion. A robust forex reserve shields against currency volatility, as the central bank balances growth acceleration with cautious financial oversight.

(With inputs from agencies.)