The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday kept the repo rate unchanged at 5.25 per cent. RBI Governor Sanjay Malhotra announced the decision after the policy meeting.
In its policy meeting, which took place between February 4-6, the committee continued with the ‘neutral’ stance.
The latest move follows a series of rate reductions last year. Since February 2025, the MPC has lowered the repo rate by a total of 100 basis points (bps) through three consecutive cuts. This brought the policy rate down from 6.5 per cent in February to 5.5 per cent in June. One basis point equals one-hundredth of a percentage point.
The standing deposit facility (SDF) rate was kept at 5 per cent. The marginal standing facility (MSF) rate and the bank rate were both set at 5.50 per cent.
RBI MPC: Growth outlook improved
The central bank has raised its growth forecast for FY26 to 7.4 per cent, up from the earlier estimate of 7.3 per cent.
The quarterly growth projections are as follows:
Q1 FY27: 6.9 per cent
Q2 FY27: 7 per cent
Domestic inflation and growth outlook remain positive, and the Indian economy remains resilient, says Malhotra.
“Amidst global headwinds, private consumption and fixed investment supported growth. Net external demand, however, remained a drag, with imports outpacing exports. On the supply side, growth in real GVA, on the back of a strong contribution from the services sector and revival in manufacturing activity, is estimated at 7.3 per cent in 2025-26,” the RBI Governor said.
RBI MPC: Inflation forecast
“Headline CPI inflation remained low in November and December even as it firmed up by one percentage point in these two months. This increase was largely driven by the lower rate of deflation in the food group. Excluding gold, core inflation remained stable at 2.6 per cent in December,” the RBI Governor said.
The MPC revised its inflation forecast from 2 per cent to 2.1 per cent. The quarterly inflation forecasts are:
Q4 FY26: 3.2 per cent
Q1 FY27: 4 per cent
Q2 FY27: 4.2 per cent
“Improving corporate sector performance and sustained momentum should boost manufacturing activity. High capacity utilisation, supportive financial conditions, and government focus on infrastructure expected to spur investments,” said Malhotra.
