- Decision
- Maintain
- Rate change
- 0 bps
- policy repo rate
- 5.25%
The Reserve Bank of India’s Monetary Policy Committee (MPC) left the policy repo rate unchanged at 5.25 % at its 6 February 2026 review, maintaining the standing deposit facility at 5.00 %, the marginal standing facility and Bank Rate at 5.50 %, and its neutral stance, judging the current setting appropriate amid a benign inflation backdrop and resilient domestic growth. After cuts totalling 125 bp between April and December 2025, the repo rate has been steady at 5.25 % since December. The unchanged corridor and liquidity adjustment facility remain the operating framework. Headline CPI inflation printed 0.7 % in November and 1.3 % in December; full-year 2025-26 inflation is projected at 2.1 % (Q4: 3.2 %), rising to 4.0-4.2 % in H1 2026-27, with risks seen evenly balanced. GDP growth is estimated at 7.4 % in 2025-26, underpinned by private consumption, investment momentum, robust credit expansion and high capacity utilisation; quarterly growth is now seen at 6.9 % in Q1 and 7.0 % in Q2 2026-27. Net external demand remains a drag as imports outpace exports, though forthcoming trade deals with the United States, the European Union, New Zealand and Oman are expected to bolster merchandise and services exports. Globally, 2025’s resilience is giving way to renewed volatility amid firmer US yields, lingering fiscal and geopolitical risks and uneven disinflation across advanced economies. The MPC reiterated that future actions will hinge on incoming data, including new GDP and CPI series to be released later in February.
Rate evolution
From June 2025 to August 2026, the Reserve Bank of India lowered the policy repo rate by 75 basis points from 6.00 per cent to 5.25 per cent, front-loading a 50 basis point cut in June, pausing through October, easing again in December and then holding from February through August. The June move reflected sharply softer CPI inflation, a revised-down inflation outlook seen durably aligned with the 4 per cent target and likely to undershoot it marginally, alongside growth that remained below aspirations in a challenging global environment, after which the Monetary Policy Committee shifted the stance to neutral, citing limited remaining space and the need to assess incoming data. The subsequent pause came even as headline inflation turned more benign on food-price disinflation, Goods and Services Tax rate rationalisation and favourable monsoon conditions, because core inflation stayed around 4 per cent, base effects were expected to lift headline inflation later in 2025-26, and the committee wanted more clarity on the transmission of earlier rate cuts and fiscal measures as tariff, trade and geopolitical uncertainties clouded the external outlook.
The Reserve Bank of India cut the policy repo rate by 25 basis points in December as exceptionally benign food prices and subdued underlying inflation gave room to support growth, but held it at 5.25 per cent in February, judging the level appropriate amid resilient domestic growth and an inflation outlook still near target, while flagging external headwinds and commodity-price, weather and geopolitical risks. In April, the committee left the policy repo rate unchanged and maintained the neutral stance as contained headline inflation and muted core pressures were offset by rising energy, weather, supply-chain and second-round inflation risks from the West Asia conflict, and it held again in June as the conflict continued, domestic demand remained resilient and higher fuel and input costs, a sub-normal south-west monsoon forecast and El Niño risks warranted greater clarity. At its August 3 to 5 meeting, the committee unanimously kept the policy repo rate at 5.25 per cent and retained the neutral stance, noting that headline CPI inflation had moved above target mainly because of food and fuel without becoming broad-based, while core inflation excluding precious metals remained benign and growth stayed resilient, but uncertainty over the south-west monsoon, El Niño, geopolitics and global trade policy required more clarity on inflation’s path and composition before any policy action.