The repo rate is the interest rate at which the RBI lends money to commercial banks for short-term needs. The decision was taken unanimously after a three-day meeting of the Monetary Policy Committee (MPC) of the RBI from February 4 to 6.
The standing deposit facility (SDF) rate remains at 5 per cent and the marginal standing facility (MSF) rate and the Bank Rate remains at 5.50 per cent.
“The MPC also decided to continue with the neutral stance,” RBI Governor Sanjay Malhotra said.
Real GDP growth projections for Q1:2026-27 and Q2 are revised upwards to 6.9 per cent and 7.0 per cent, respectively, taking into factors like prospective trade deal with the US, he said.
The landmark comprehensive trade pact with the European Union coupled with trade deals with New Zealand and Oman should help diversify exports and strengthen the external sector, Malhotra said.
Consumer Price Index (CPI) inflation for 2025-26 is now projected at 2.1 per cent with Q4 at 3.2 per cent., he said.
CPI inflation for Q1:2026-27 and Q2 are projected at 4.0 per cent and 4.2 per cent, respectively. Excluding precious metals, the underlying inflation pressures remain muted, RBI Governor said.
Rationale for Monetary Policy Decisions
The MPC noted that since the last policy meeting, external headwinds have intensified though the successful completion of trade deals augurs well for the economic outlook. Overall, the near-term domestic inflation and growth outlook remain positive.
On the growth front, economic activity remains resilient. The First Advance Estimates suggest continuing growth momentum, driven by domestic factors amidst a challenging external environment. The growth outlook remains favourable.
The MPC voted to continue with the existing policy rate. The MPC also agreed to retain the neutral stance. However, Prof. Ram Singh retained his view that the stance be changed from neutral to accommodative.
Prior to Friday’s action, RBI had announced rate cuts aggregating 125 basis points over the past year.
Read full text here: https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR20530D3EAF28B417497981BA800A7B3C0DCC.PDF
