The Reserve Bank of India has kept its benchmark repurchase rate unchanged citing benign inflation, even as a myriad trade deals boosts the outlook for the world’s fastest growing major economy.
The RBI’s six-member Monetary Policy Committee (MPC), which met over 4-6 February, voted unanimously to keep the repo rate at 5.25%, Governor Sanjay Malhotra said during his televised speech on Friday. The policy stance was retained at neutral.
A majority of the 39 economists surveyed by Bloomberg had expected the central bank to keep its benchmark repurchase rate unchanged at 5.25% on Friday. With India’s GDP growth rate seen at more than 7% for a second straight year in FY27 and the rupee posting its biggest rally in seven years, some economists expect the rate-cut cycle may even be over.
The RBI has now cut rates by a total of 125 basis points since February 2025—the most aggressive easing since 2019. It had cut rates by 25 basis points at its last meeting in December.
One basis point is one-hundredth of a percentage point.
RBI MPC Decisions Today
Here’s a quick look at the key decisions taken by India’s Monetary Policy Committee over their 4-6 February meeting:
- RBI maintains benchmark repurchase rate at 5.25%.
- RBI maintains a neutral monetary policy stance going ahead.
- India’s GDP growth seen at 6.9% in Q1 FY27 versus 6.7% earlier.
- India’s inflation rate seen at 3.9% in Q1 FY27 versus 4.0% earlier.
- New CPI, GDP series for Indian economy are due later in February.
“The successful completion of trade deals augur well for the economic outlook,” RBI Governor Sanjay Malhotra said in his speech on Friday.
India has signed a “mother of all trade deals” with the European Union and arrived at an agreement with the United States to reduce the tariff on its exports to 18% from 50% earlier.
After the RBI’s status quo on repo rate, the rupee held on to slight gains against the dollar. India’s government bonds extended losses as the central bank did not announce any fresh liquidity measures, with 10-year bond yields rising as much as six basis points to 6.70%.
Malhotra said he will give full-year inflation or growth projections in April after the government publishes a new series for both data.
“The governor sounded optimistic about the growth prospects in FY27 since ‘high frequency indicators suggest continuation of the growth momentum’,” said Geojit Investments Chief Investment Strategist V.K. Vijayakumar.
“An important takeaway from Malhotra’s remark that ‘there has been uptick in bank credit growth in recent months’ is that the profitability of banks are likely to improve going forward, and this is good news for banking stocks.”
Going forward, RBI’s monetary policy will guided by the evolving macroeconomic conditions and outlook based on the data of the new series in charting future economic activity, Malhotra said.
“The RBI tone shows comfort on current policy setting with growth strengthening and inflation remaining benign,” said Gaura Sen Gupta, India economist at IDFC First Bank Ltd. She now expects the MPC to remain on a “prolonged pause”.
