RBI Monetary Policy Committee Maintains Status Quo on Key Interest Rates
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) concluded its latest meeting on February 6, 2026, with a unanimous decision to keep the benchmark repo rate unchanged at 6.50%. This marks a continuation of the central bank's cautious stance aimed at balancing economic growth with price stability in a volatile global environment.
Key Decisions and Rationale from the MPC Meeting
Governor Sanjay Malhotra, addressing the media after the policy announcement, emphasized that the committee's primary focus remains on anchoring inflation expectations while supporting the ongoing economic recovery. The MPC voted 6-0 in favor of maintaining the current repo rate, reflecting a consensus on the need for vigilance against inflationary pressures.
The standing deposit facility (SDF) rate and the marginal standing facility (MSF) rate have also been held steady at 6.25% and 6.75%, respectively. This decision comes amidst persistent concerns over core inflation, which has remained stubbornly high due to supply-side constraints and elevated food prices.
Economic Outlook and Inflation Projections
The RBI has retained its GDP growth forecast for the fiscal year 2025-26 at 7.0%, citing resilient domestic demand and improving rural consumption. However, the central bank has slightly revised its inflation projection upward to 4.7% for the same period, up from the previous estimate of 4.5%, driven by uncertainties in global commodity markets and erratic monsoon patterns affecting agricultural output.
"While the Indian economy continues to show robust growth momentum, we cannot afford to be complacent on the inflation front," stated Governor Malhotra. "The MPC remains committed to bringing inflation down to the target of 4% on a durable basis, and our current policy stance is calibrated to achieve that objective."
Global Factors and Domestic Considerations
The policy outcome was influenced by several external and internal factors:
- Volatility in global financial markets and geopolitical tensions affecting trade flows.
- Fluctuating crude oil prices adding to input cost pressures for Indian industries.
- Strengthening of the US dollar impacting emerging market currencies, including the Indian rupee.
- Domestic factors such as uneven monsoon distribution and rising minimum support prices for crops.
The RBI has also announced measures to enhance liquidity management, including fine-tuning operations in the money market to ensure adequate credit flow to productive sectors of the economy. The central bank reiterated its accommodative stance, with a focus on withdrawing accommodation as conditions warrant, to ensure that inflation remains within the target band over the medium term.
Market Reaction and Future Implications
Financial markets had largely anticipated the status quo decision, with bond yields and equity indices showing muted reactions post-announcement. Analysts suggest that the RBI's cautious approach provides stability but also signals that rate cuts are unlikely in the near term unless inflation shows a sustained decline.
The next meeting of the Monetary Policy Committee is scheduled for April 2026, where further assessments of economic data and global developments will guide future policy actions. Stakeholders across banking, industry, and consumer sectors are advised to monitor inflation trends closely, as any significant deviation could prompt a shift in the RBI's monetary policy stance.
