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Sanjay Malhotra, in his tenure as RBI governor, will focus on addressing key economic challenges, including balancing inflation control with growth stimulation. Ensuring currency stability will be critical, given the rupee’s susceptibility to global volatility.
As per brokerages, Malhotra is expected to build upon the stricter regulatory framework established during Shaktikanta Das’s tenure.
Brokerages largely anticipate a shift in the interest rate trajectory, projecting rate cuts to begin in February 2025.
Barclays
Barclays predicts a smooth handover, expecting Malhotra to uphold the fiscal-monetary coordination that marked Das’s tenure. The firm anticipates the continuation of the Monetary Policy Committee’s (MPC) pragmatic approach, with no radical shifts in policy. Barclays also forecasts the MPC to begin rate cuts by February 2025.
Citi
Citi echoes expectations of strong fiscal-monetary alignment under Malhotra’s leadership. Markets will closely watch for any shifts in the MPC’s growth-inflation assessments. Citi sees a likely 25 basis point (bps) rate cut in February and will reassess its terminal repo rate projection of 6% thereafter.
BofA
BofA underlines the challenging environment Malhotra inherits, including a sharper-than-expected growth slowdown and inflation volatility. While his policy preferences remain unclear, BofA notes that Malhotra’s appointment reduces the likelihood of intermeeting rate cuts even if inflation moderates sharply.
Macquarie
Macquarie notes that Malhotra, much like his predecessor Shaktikanta Das, comes from a bureaucratic background rather than an academic one, but with more relevant financial services experience. The brokerage highlights inflation control and growth concerns as the new governor’s primary challenges. Additionally, stabilising the Indian rupee and managing the regulatory environment, which toughened under Das, will be areas of market focus.
Nomura
Nomura views Malhotra’s appointment positively, anticipating a dovish stance that clears the path for urgent rate easing. While his views on key economic issues remain uncertain, Nomura highlights Malhotra’s experience in balancing revenue generation with growth priorities.
Emkay
Initial feedback from senior bankers paints Malhotra as a direct and effective policy communicator. Emkay notes his emphasis on pushing banks towards technology adoption and his decisive actions on capital market taxation during his tenure in the Department of Financial Services (DFS).
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