RBI MPC Meeting: No Change in Repo Rate

The Reserve Bank of India on Friday kept its policy rate unchanged and retained a neutral stance, signalling a pause after a sharp easing cycle even as it nudged up growth projections for the next financial year.

Repo Rate Kept Unchanged

The six-member Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, voted to hold the repo rate at 5.25%. The decision comes after cumulative cuts of 125 basis points since February 2025. Also, it comes amid fresh fiscal and trade cues from the Union Budget for 2026–27 and the recently announced India–US trade deal.

Markets had largely priced in a pause, given the scale of past easing and signs of firm domestic demand.

Policy Stance Unchanged

The MPC also maintained its policy stance at ‘Neutral’. The meeting was the sixth and final bi-monthly policy review for FY26. It was held over three days from 4 February to 6 February, with the decision announced on Friday.

With rates now steady for a second consecutive meeting, the central bank appears to be waiting for clearer signals on inflation trends before making its next move.

Growth Forecast

The RBI raised its real GDP growth projection for FY26. It raised it to 7.4% from 7.3% earlier. It said economic activity is expected to hold up well into FY27. The central bank also revised up its quarterly growth forecasts for the first half of FY27. These are:

• Q1 FY27 GDP growth: 6.9%, up from 6.7% earlier

• Q2 FY27 GDP growth: 7%, up from 6.8% earlier

The upward revision reflects continued momentum in domestic demand and government spending plans outlined in the latest budget. Market watchers feel that improving external conditions following the India–US trade agreement may have also contributed to it.

Meaning For Markets And Sectors

The status quo on rates provides stability for interest-rate-sensitive sectors. For companies, the unchanged repo rate means borrowing costs may not increase in the near term. For investors, the focus may shift from policy easing to earnings growth and inflation data. More so as Q4 FY26 approaches.

Bond markets are likely to track inflation prints closely. This is given the RBI’s warning on base effects. On the other hand, equity markets may take cues from the upgraded growth outlook rather than rate action.

Sources:

NDTV

Livemint