India’s central bank, guided by Governor Sanjay Malhotra, has held the policy repo rate at 5.25%, maintaining a neutral stance as inflation remains subdued and growth prospects brighten, even as global economic uncertainties linger.

In its 59th Monetary Policy Committee (MPC) meeting held from 4–6 February 2026, the Reserve Bank of India (RBI) opted to keep its key policy repo rate unchanged at 5.25%-a level it has maintained since late 2025 following a series of rate cuts.

The MPC also preserved a neutral monetary stance, signalling flexibility to respond to future data on inflation and growth. Governor Sanjay Malhotra announced the decision, noting that the hold was a consensus choice by all six members of the committee.

The repo rate-the rate at which the RBI lends to commercial banks is crucial for influencing borrowing costs across the economy. An unchanged rate generally means stability for consumers and businesses alike, affecting everything from home loan EMIs to corporate borrowing costs.

In addition to the repo rate, the Standing Deposit Facility (SDF) was kept at 5.00%, while the Marginal Standing Facility (MSF) and Bank Rate remained at 5.50%.

According to official RBI projections discussed during the meeting, India’s GDP is expected to remain resilient, with growth estimates staying robust, supported by domestic demand and export prospects.

Meanwhile, inflation has stayed well within target bounds, giving the MPC room to avoid an immediate move on interest rates.

Why the Pause? Neutral Stance Explained

The MPC’s decision to hold rates reflects a careful balance between supporting growth and ensuring inflation remains tamed. Several factors influenced this decision:

1. Inflation Well Contained

Headline inflation in India has continued to hover below the RBI’s medium-term target of 4%, giving policymakers confidence that price pressures are under control. Consumer Price Index (CPI) figures for late 2025 showed inflation remaining subdued, even as food prices experienced slight upticks—within manageable thresholds.

2. Growth Outlook Remains Healthy

Governor Malhotra highlighted that the Indian economy has shown “robust and resilient” growth trends, even as some global economies struggle with tepid recovery. In particular, trade developments-including a recent India–United States trade deal that significantly lowered tariffs on Indian exports from around 50% to 18%-provide a boost to export potential and overall economic momentum.

These developments also dovetail with expectations of other trade agreements, such as the EU-India free trade arrangements, which are anticipated to strengthen export flows and cross-border investment over the coming quarters.

3. Global Policy Divergence and Headwinds

While domestic indicators look favourable, global conditions remain uncertain-particularly with divergent monetary policies in major economies, commodity price volatility, and geopolitical tensions. These external risks factor into the RBI’s cautious stance. By holding rates and keeping policy neutral, the central bank retains flexibility to act if new risks emerge.

In his official policy statement, Malhotra also emphasised that the RBI is prepared to take “pre-emptive and calibrated liquidity actions” to ensure monetary policy transmission remains effective and financial stability is preserved.

This means that, while headline rates are unchanged, the central bank will manage liquidity conditions to support financial markets and credit flows as needed.

Recent Context: From Rate Cuts to Pause

To understand the significance of the RBI’s February decision, it helps to look back at the recent policy path:

• In December 2025, the RBI cut the repo rate by 25 basis points to 5.25%, marking the culmination of a series of reductions that cumulatively lowered the benchmark by 125 basis points from earlier highs. Those cuts were intended to stimulate economic activity as inflation softened.
• At that time, the MPC also flagged a “neutral” policy stance, signalling it would be ready to adjust rates up or down depending on evolving data.
• The February 2026 pause is the first time the MPC has opted not to move the repo rate since that rate cut, marking an important phase in the monetary cycle where data rather than directionality will drive future decisions.

This measured approach underscores a commitment to stability and cautious optimism—and is consistent with the RBI’s overarching framework of inflation targeting while supporting growth.

What It Means for People and Markets

For borrowers, especially those with floating-rate home loans, the continued repo rate means EMIs are unlikely to fall immediately, although banks may still adjust lending rates based on transmission. Fixed deposit and savings rates may also remain steady, as banks price deposits in response to broader rate expectations.

For businesses and markets, the neutral stance signals predictability, helping firms plan investment and expansion without the immediate risk of policy tightening. However, the interplay of trade developments and global trends will remain key watchpoints for investors and analysts.

The Logical Indian’s Perspective

The RBI’s decision to hold the repo rate at 5.25% illustrates a nuanced monetary strategy: one that seeks to nurture growth while safeguarding price stability.

The Logical Indian welcomes this balanced approach, especially in light of persistent global uncertainties that could easily unsettle economies dependent on trade and capital flows.

Yet, policy choices at the macro level must ultimately translate into meaningful improvements in people’s everyday lives-from affordable credit for families to secure employment opportunities for young workers.

Transparent communication from policymakers, coupled with grassroots engagement, can help bridge the gap between high-level monetary decisions and community realities.