In its final bi-monthly meeting of the 2025–26 fiscal year, the Reserve Bank of India (RBI) unanimously decided on February 6, 2026, to keep the benchmark repo rate unchanged at 5.25%.
Coming just days after the Union Budget, this decision signals a shift toward a “prolonged pause” as the central bank balances blistering economic growth with emerging global uncertainties.
1. The Monetary Policy Snapshot
The Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, opted for stability following a cumulative 125-basis-point reduction in rates over the past year.
| Rate / Stance | Status (as of Feb 6, 2026) | Value |
| Repo Rate | Unchanged | 5.25% |
| Standing Deposit Facility (SDF) | Unchanged | 5.00% |
| Marginal Standing Facility (MSF) | Unchanged | 5.50% |
| Bank Rate | Unchanged | 5.50% |
| Policy Stance | Neutral | Flexibility to move in either direction. |
2. Why the RBI Hit the “Pause” Button
Governor Malhotra described India as being in a “Goldilocks” spot—an ideal economic state where growth is accelerating while inflation remains relatively tame.
- The “US Trade Deal” Buffer: The landmark agreement between New Delhi and Washington, which slashed U.S. tariffs on Indian imports from 50% to 18%, has significantly eased external pressure on the rupee and export margins, giving the RBI more “policy cover” to hold rates.
- Benign Inflation: Headline inflation remained within the tolerance band (recording 1.3% in December 2025), primarily driven by ongoing food deflation.
- Precious Metal Volatility: The RBI noted a slight “hawkish tilt” due to rising prices of precious metals (gold and silver), which are projected to contribute roughly 60-70 basis points to future inflation figures.
- Wait-and-Watch on Data: With a new series for GDP and CPI (base 2024=100) set for release on February 12, 2026, the MPC preferred to wait for the updated statistical landscape before making further moves.
3. Growth & Inflation Outlook
The RBI marginally upgraded its economic projections for the upcoming year, fueled by robust domestic demand and new international trade pacts (US and EU).
- GDP Growth (FY26): Revised upward to 7.4% (from 7.3%).
- CPI Inflation (FY26): Projected at 2.1% (up from 2.0%), reflecting the impact of precious metal costs.
- FY27 Projections: Inflation is expected to rise to 4.0% (Q1) and 4.2% (Q2) due to unfavorable “base effects” from the sharp price drops seen in early 2025.
4. Key Regulatory & Consumer Measures
Beyond interest rates, the February policy introduced several high-impact structural changes:
- Digital Fraud Shield: A new framework to compensate customers up to ₹25,000 for losses in small-value fraudulent transactions.
- MSME Credit: The limit for collateral-free loans to micro and small enterprises was doubled from ₹10 lakh to ₹20 lakh.
- Real Estate Boost: Banks are now permitted to lend directly to REITs, providing a cheaper source of capital for the commercial real estate sector.
- FPI Liberalization: The ₹2.5 lakh crore cap on foreign investment in corporate bonds under the Voluntary Retention Route (VRR) has been scrapped.
Conclusion: Stability is the New Signal
By maintaining the 5.25% rate and a neutral stance, the RBI is signaling that the era of aggressive rate cuts is likely over. For the average consumer, this means home loan EMIs and FD rates are expected to remain stable in the near term. The central bank is now focused on “effective transmission”—ensuring that the 125 basis points of cuts already announced fully reach the end-borrowers.
