US Fed Chair Winning Praise from India’s RBI Governor Sanjay Malhotra

In a rare public comment on global monetary leadership, Reserve Bank of India (RBI) Governor Sanjay Malhotra offered commendation for US Federal Reserve Chair Jerome Powell, describing his policy management as "strong and consistent" amid global uncertainty. Speaking at an international economic forum, Malhotra used the opportunity not just to highlight Powell’s balancing act in the face of inflation and growth challenges, but to underscore a broader message: the necessity of central bank independence in an increasingly complex economic world.

His remarks come at a pivotal time for both developed and emerging markets, as monetary authorities across the globe navigate inflationary aftershocks, volatile capital flows, and the growing expectation for central banks to do more than just regulate liquidity. Malhotra’s comments were carefully framed, but the implications were clear — in today’s hyperconnected global economy, the autonomy of central banks is not just ideal; it's non-negotiable.

Applauding the Fed’s Performance Amid Global Turbulence

In his comments, Malhotra acknowledged the tough decisions the US Fed has had to make over the last two years — from aggressive rate hikes to strategic pauses — aimed at containing persistent inflation while avoiding a full-blown recession. He called Powell’s leadership “measured and adaptive,” and pointed out that despite criticism from both political sides in the US, the Fed had managed to “preserve market confidence.”

“Chair Powell has had a difficult path,” Malhotra noted. “Taming inflation without derailing growth, while preserving employment, is no easy task. But the Fed’s credibility remains intact — a sign of sound leadership and institutional independence.”

This praise is noteworthy, considering India’s traditionally cautious stance on commenting on the monetary policies of major global economies. By complimenting the US Fed, Malhotra is indirectly reinforcing India’s own monetary principles, where inflation-targeting and independent interest rate decisions remain key tools in managing macroeconomic stability.

Central Bank Independence: A Pillar of Sound Economic Policy

Beyond his praise of the Fed, Malhotra turned attention to a subject close to home — the role of central bank independence in maintaining economic credibility. He stressed that while central banks must engage with elected governments and factor in fiscal realities, their primary duty lies in monetary stability.

“A central bank must be insulated from short-term political pressures. Our focus is price stability, financial system soundness, and sustainable growth. Any deviation undermines long-term trust,” he stated.

Malhotra’s comments are especially timely given the global trend of increased political pressure on central banks. In several countries, elected leaders have expressed frustration with high interest rates, urging central banks to pivot quickly toward easing — often against the backdrop of upcoming elections. In contrast, India’s RBI under Malhotra has remained relatively shielded, thanks to its well-defined legal mandate and institutional legacy.

India’s Approach: Balancing Growth and Inflation

While Malhotra’s praise of the Fed reflects global awareness, his own stewardship at the RBI has followed a path of cautious pragmatism. Under his leadership, the RBI has steadily increased the repo rate over multiple quarters to control inflation, which had spiked following the COVID-19 pandemic and global supply chain disruptions. At the same time, the central bank has been careful not to stifle economic recovery, particularly in sectors like real estate, MSMEs, and exports.

India’s inflation trajectory has started showing signs of normalization, aided by a stable rupee, strong foreign exchange reserves, and improving supply-side metrics. According to recent RBI bulletins, retail inflation has been trending close to the 4% target band, while GDP growth has held firm at around 7%, making India one of the fastest-growing major economies in the world.

This delicate balance has earned Malhotra and the RBI global recognition, as India has managed to avoid both the stagflation threats seen in Europe and the banking volatility witnessed in parts of the US.

Global Policy Coordination: A Silent Necessity

Malhotra also took time to speak on the interdependence of national monetary strategies, especially in the face of capital outflows, currency volatility, and shifting interest rate differentials. He emphasized that while each central bank must prioritize its domestic mandate, coordinated signaling — especially among G20 economies — remains vital for global financial stability.

“No central bank operates in a vacuum. What the Fed does impacts the RBI. What the ECB adjusts ripples through Asia. This is why communication and predictability matter more than ever,” he said.

Malhotra hinted at the need for more structured global dialogue, not just at emergency meetings like those seen during COVID-19, but as part of a continuous framework for economic resilience.

RBI’s Focus Areas in the Coming Quarters

Looking ahead, Malhotra outlined three major areas of focus for the RBI:

1. Inflation Targeting with Flexibility: Though inflation has eased, the RBI remains watchful, especially of food prices and imported energy shocks.

2. Strengthening Financial Sector Health: Ensuring liquidity, tightening regulatory oversight of NBFCs, and fostering a stable credit environment remain top priorities.

3. Digital and Payment Infrastructure: With the continued success of UPI and digital inclusion, the RBI is pushing forward with innovation — including the Central Bank Digital Currency (CBDC) — while guarding against fraud and data misuse.

Political Neutrality in Monetary Policy

Malhotra’s emphasis on independence also seemed to preemptively address concerns that could arise as India approaches its next general elections. While some critics speculate that political actors may seek looser monetary policy to boost short-term growth, the RBI Governor was firm that rate decisions would remain “data-driven, forward-looking, and completely apolitical.”

“Elections will come and go. Our job is to ensure financial stability across cycles, not shape them,” he said emphatically.

 A Vote of Confidence in Monetary Institutions

In praising the US Fed chair while strongly defending the RBI’s independence, Governor Sanjay Malhotra delivered a message that resonates far beyond central bank corridors. It is a reaffirmation of monetary integrity, cross-border respect, and the enduring need for expertise-driven leadership in an era of economic unpredictability.

As global financial systems grow more complex, it is these steady, often quiet voices at central banks that continue to protect economic trust — one policy decision at a time. In Malhotra’s words, “When central banks act with independence and integrity, economies find their balance — no matter the storm.”