RBI hints further steps to ensure liquidity, US tariff uncertainties to cool off soon

New Delhi, Feb 8 (IANS) The Reserve Bank of India (RBI) has always focused on ease of credit and will take further steps to ensure that enough liquidity remains in the banking system as there is "room for improvement", Governor Sanjay Malhotra said on Saturday, adding that US-related tariff uncertainties will cool off in the coming months.

Addressing the media along with Union Finance Minister Nirmala Sitharaman in the national capital, Malhotra also said the central bank is not targeting any price band for the rupee, while focusing more on curbing excess volatility.

"We have provided for liquidity and going forward too, we will be nimble, agile and watchful of the banking system's requirement on liquidity -- both transient and durable," said the Reserve Bank Governor.

Malhotra further stated that most of the rupee's depreciation is due to US tariff announcements and global uncertainties and hopefully, "that should settle down and help us with downward movement on rupee".

His comments came after the RBI’s Monetary Policy Committee (MPC) meeting on Friday reduced the policy rate by 25 basis points to 6.25 per cent, while retaining the stance at neutral.

According to the RBI Governor, the central bank would continue to monitor the situation and take steps to ensure ease of credit as required. The growth-inflation dynamics open up policy space for the MPC to support growth, while remaining focussed on aligning inflation with the target.

The central bank has pegged the GDP growth at 6.7 per cent for next fiscal (FY26). The projection for retail inflation stood at 4.8 per cent for the current fiscal while it was cut to 4.2 per cent for FY26.

According to Malhotra, after the income tax cut, the repo rate cut should further help improve consumption. The RBI will also be watchful of any depreciation of the rupee that leads to inflation.

According to Morgan Stanley, it expects the RBI to take some additional liquidity measures before end-March and another cut of 25 basis points in the repo rate in April.