RBI Monetary Policy 2026: MPC Pauses Repo Rate To 5.25% First Time In Seven Months; Key Highlights Here

The Reserve Bank of India (RBI) on Friday, February 6, 2026, decided to keep the policy repo rate unchanged at 5.25 percent, maintaing a neutral stance as it continues to watch inflation trends and overall economic growth. The decision comes after a cumulative 125 basis point reduction in interest rates during FY25-26.

RBI MPC Meeting February 2026: Repo Rate Held at 5.25%; Keeps Stance 'Neutral'

Announcing the outcome of the Monetary Policy Committee (MPC) meeting, RBI Governor Sanjay Malhotra said the panel voted unanimously to maintain the repo rate at 5.25 percent while retaining a neutral policy stance.

All six members of the MPC backed the decision, signalling broad consensus within the central bank that a pause is appropriate at this juncture.

Governor Malhotra noted that the RBI has been actively supporting liquidity conditions over the past quarter through Variable Rate Repo (VRR) operations and Open Market Operations (OMOs), aimed at ensuring adequate funds in the financial system.

The RBI's move aligned broadly with market expectations. According to a Goodreturns poll of 30 economists and market experts, 20 respondents had expected the central bank to hold rates steady, while 10 had anticipated a rate cut. Among those expecting easing, most had forecast a modest 25 basis point reduction.

RBI Inflation Outlook: CPI Seen at 2.1% in FY26

In its latest projections, the RBI pegged consumer price index (CPI) inflation for FY26 at 2.1 percent. Inflation is expected to rise moderately in the next financial year, with CPI inflation projected at 4.0 percent in the first quarter of FY27 and 4.2 percent in the second quarter, while inflation for Q4 FY26 is estimated at 3.2 percent.

GDP Growth Projections Revised Upward for FY27; Indian Economy on Strong Growth Path, Says RBI Governor

On the growth front, the central bank revised its economic outlook upward. The RBI raised its GDP growth forecast for Q1 FY27 to 6.9 percent and increased the projection for Q2 FY27 to 7.0 percent, reflecting improving economic momentum.

RBI Governor said the Indian economy continues to remain on a stable and improving path, with real GDP growth expected to accelerate to a strong 7.4 percent, supported by resilient domestic demand and improving macroeconomic fundamentals

RBI Cuts Repo Rate by 125 bps Total Since February 2025

Since February 2025, the MPC has lowered the repo rate by a cumulative 125 basis points to support economic growth. This included 25 basis point cuts in February and April, a larger 50 basis point reduction in June and another 25 basis point cut in December.

However, the RBI had already paused rate cuts in the August and October policy meetings, signalling a more measured stance as inflation risks persisted.

"The policy statement has been broadly along expected lines, with the Central Bank having done the heavy lifting over the last few months on both policy rates and liquidity infusion. At the same time, the RBI is expected to remain proactive on liquidity requirements, based on anticipated liquidity flows. While this would imply the prevalence of surplus liquidity for a while, it is expected that there will be a much closer alignment of overnight rate settings with the policy rate," Mr. Rajeev Radhakrishnan, CFA, CIO - Fixed Income, SBI Mutual Fund.

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Credit: Goodreturns