The Reserve Bank of India (RBI) has decided to keep its benchmark repo rate unchanged at 5.25%, citing continued moderation in inflation and a stable economic outlook. The decision was announced after the six-member Monetary Policy Committee (MPC) concluded its meeting from February 4 to 6.
Governor Sanjay Malhotra stated during a televised address that the MPC unanimously voted to maintain the status quo, retaining a neutral policy stance. This aligns with expectations from the majority of market analysts, with 39 economists surveyed by Bloomberg predicting no change in the repo rate.
India’s inflation rate remains below the RBI’s tolerance band, providing room for the central bank to hold rates steady. The country’s GDP growth is projected to exceed 7% for the second consecutive year in FY27, bolstering prospects of a steady economic recovery. Additionally, the rupee has experienced its strongest rally in seven years, further supporting the central bank’s cautious approach.
Key Highlights from the RBI MPC Meeting:
- Repo rate held at 5.25%
- Monetary policy remains neutral
- India’s GDP growth forecast for Q1 FY27 revised upward to 6.9% from 6.7%
- Inflation forecast for Q1 FY27 adjusted slightly downward to 3.9% from 4.0%
- New CPI and GDP series for India expected later this month
Since February 2025, the RBI has reduced rates by a total of 125 basis points, marking its most aggressive easing since 2019. The last rate cut occurred in December, when the central bank lowered rates by 25 basis points.
Analysts suggest that given India’s resilient growth and stable inflation, the rate-cut cycle may now be nearing its end.
