RBI Governor Says Interest Rates May Curb Stability Risks

Reserve Bank of India Governor Sanjay Malhotra stated on Friday that the central bank may use interest rates to address financial-stability risks if necessary. The move comes amid analyst expectations of increasing pressure on the Indian rupee.

Malhotra clarified that while monetary policy is primarily intended to maintain price stability, it "could be deployed for financial stability in some circumstances." He indicated that the bank's rate-setting panel evaluates the timing and effectiveness of such actions when deciding if interest rates should be integrated into the bank's foreign-exchange toolkit.