RBI keeps repo rate unchanged at 5.25% in first policy review after Union Budget 2026

The RBI holds rates steady, maintains a neutral stance, and projects resilient GDP growth amid easing inflation pressures and global uncertaint

PGurus Newsdesk

February 6, 2026

RBI stays put on rates as growth remains strong, inflation contained

Growth outlook steady, inflation within comfort zone; MPC maintains neutral stance

The Reserve Bank of India on Thursday kept the repo rate unchanged at 5.25 per cent, marking its first monetary policy decision after the Union Budget 2026. The decision was announced by RBI Governor Sanjay Malhotra after a three-day meeting of the Monetary Policy Committee (MPC).

The move was widely anticipated, with the central bank choosing policy continuity amid strong domestic growth, easing inflationary pressures, and improving global trade conditions following India’s trade agreement with the United States.

Governor Malhotra said the US trade deal augurs well for India’s economic prospects, helping reduce tariff-related uncertainties and reinforcing the country’s position as one of the fastest-growing major economies.

Neutral stance signals prolonged rate stability

The MPC retained its monetary policy stance at “neutral,” indicating that interest rates are likely to remain stable for some time, unless there is a material shift in inflation or growth dynamics.

“The Indian economy is in a good spot despite global uncertainty,” Malhotra said, adding that underlying data points to growth momentum that could be sustained over a longer horizon.

Inflation projections revised marginally higher

The RBI slightly revised its inflation outlook for the next financial year. Retail inflation for the first quarter of FY27 (March–May 2026) has been projected at 4 per cent, compared to the earlier estimate of 3.9 per cent. Inflation for the subsequent quarter is now seen at 4.2 per cent.

For the current financial year ending next month, overall retail inflation is projected at 2.1 per cent, with inflation for the ongoing quarter estimated at 3.2 per cent—well within the RBI’s tolerance band.

Growth outlook remains resilient

On the growth front, the RBI pegged real GDP growth for the current financial year at 7.4 per cent. For the next financial year, growth is projected at 6.9 per cent in the first quarter and 7 per cent in the second quarter.

India’s Economic Survey has also projected GDP growth of 7.4 per cent for the current year, with next year’s growth forecast ranging between 6.8 per cent and 7.2 per cent, reinforcing expectations of sustained economic momentum.

The RBI’s decision underscores its confidence in India’s macroeconomic fundamentals while maintaining flexibility to respond to evolving global and domestic risks.

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