Repo Rate Unchanged
In a significant decision during its February 2026 meeting, the Reserve Bank of India's Monetary Policy Committee (MPC), under the leadership of Governor
Sanjay Malhotra, opted to keep the key policy repo rate static at 5.25%. This marks a continuation of the current monetary stance, with the central bank maintaining a 'neutral' outlook. The committee, comprising six members, concluded its final bi-monthly deliberation for the financial year 2025-2026, signaling a period of stability in borrowing costs. This decision comes in the wake of crucial national events, including the recent presentation of the Union Budget for 2026-27 and the establishment of an India-US trade agreement, both of which likely influenced the MPC's considerations. The unchanged repo rate means other key rates also remain constant: the Standing Deposit Facility rate stays at 5 percent, and the Marginal Standing Facility rate and Bank Rate are fixed at 5.5 percent. This stability is a crucial factor for businesses and consumers alike as they plan their financial strategies for the upcoming periods.
Future Policy Outlook
Looking ahead, the RBI's monetary policy for the entirety of the upcoming financial year, commencing April 2026, will be formulated and guided by the newly released Gross Domestic Product (GDP) series. This new series, anticipated to be published later in February 2026, will provide a revised and potentially more accurate picture of the nation's economic performance. The adoption of this updated GDP data signifies a commitment by the RBI to base its critical monetary decisions on the most current and comprehensive economic indicators available. This strategic shift aims to enhance the precision and effectiveness of the central bank's interventions in managing inflation and fostering sustainable economic growth. The MPC's decision to hold the repo rate steady, coupled with the forthcoming GDP data, suggests a cautious yet forward-looking approach to monetary management, prioritizing stability while remaining adaptable to evolving economic landscapes.
Inflationary Trends
Concerning the current inflationary environment, the latest figures released by the Ministry of Statistics and Programme Implementation present a notably moderate picture. Provisional data for December 2025 indicates that consumer price inflation stood at a modest 1.33 percent on a year-on-year basis. This represents a decrease when compared to the inflation rate recorded in December 2024. The downward trend in inflation provides the RBI with greater flexibility in its monetary policy decisions, reinforcing the rationale for maintaining the current repo rate. Lower inflation reduces the immediate pressure on the central bank to tighten monetary policy to curb price rises, allowing it to focus on other economic objectives such as growth and financial stability. The sustained low inflation figures are a positive sign for the economy, potentially boosting consumer confidence and encouraging investment.
