Despite global turbulence caused by trade friction, mounting debt and geopolitical shocks, financial conditions have eased and banking systems remain broadly resilient. Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Friday. Within this landscape, India has distinguished itself as a rare anchor of stability, he added.
As of late September, India’s foreign exchange reserves stood at $700.2 billion, enough to cover more than 11 months of merchandise imports, according to the RBI. Meanwhile, the inflation outlook remains benign. Consumer price inflation came in at 2.07% in August, slightly higher than in July but still comfortably within the RBI’s 2-6% target band. An RBI survey in September also showed that households expected price pressures across key product groups to ease further.
Global underperformance warning
Looking ahead, Malhotra warned that the global economy would likely underperform its true potential for years. High tariffs, stretched public debt, and complacent equity markets presented risks that weren’t fully priced in, raising the spectre of fiscal dominance constraining monetary policy in several economies. “Perhaps gold prices now are showing the kind of movement that oil used to – that is, acting as a barometer of global uncertainty,” he added.