RBI's Monetary Policy
Context:
On February 6, 2026, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decided to maintain the status quo on interest rates.
This decision comes shortly after the presentation of the Union Budget and follows a period of sustained monetary easing in 2025
Key Decisions & Projections:
Repo Rate is kept unchanged at 5.25%.
This follows a cumulative reduction of 125 basis points in 2025, including a 25 basis point cut in December 2025.
Policy Stance is retained as "Neutral", indicating that the RBI will keep its options open to adjust policy based on prevailing economic factors.
GDP Growth Projection is revised upwards to 7.4% (from the earlier projection of 7.3%) for FY 2026.
Retail inflation projected at 2.1% (marginally up from 2%).
Rationale Behind the Pause:
Domestic Strength:
The RBI Governor noted that measures announced in the Union Budget are likely to boost growth.
The economy is showing strong momentum supported by tech investments and large-scale fiscal stimulus.
Global Uncertainty:
The decision represents a "deliberate pause" to preserve flexibility amidst a volatile global environment characterized by:
Escalating geopolitical frictions.
Rising trade tensions (despite India's recent trade deals with the EU and US).
Divergent monetary policies across advanced economies.
Impact on Borrowers:
Stable EMIs:
Since the repo rate remains unchanged, lending and deposit rates are expected to remain stable.
Consequently, there will be no change in Equated Monthly Instalments (EMIs) for home and personal loans linked to the repo rate.