The Reserve Bank of India’s Monetary Policy Committee (MPC) is set to announce its policy decision on Friday, February 6, 2026, with markets largely expecting the central bank to pause after an aggressive rate-cut cycle. The decision comes amid a supportive macro backdrop that includes easing inflation, steady growth, a growth-focused Union Budget, and reduced external uncertainty following major trade agreements such as the India-US deal.
The three-day MPC meeting began on February 4, and RBI Governor Sanjay Malhotra will announce the policy outcome at 10 am, followed by a press conference at noon.
At present, the repo rate stands at 5.25%, following a cumulative 125 basis points cut since February last year. The most recent reduction of 25 basis points was announced in December after the MPC paused in the two preceding meetings.
The current easing cycle began in February 2025, when the MPC cut rates by 25 basis points. This was followed by another 25-basis-point cut in April and a sharper 50-basis-point reduction in June. After pausing in August and October, the RBI resumed easing in December with a final 25-basis-point cut.
As a result, the repo rate declined from 6.5% in February to 5.25% by December, marking one of the most decisive easing cycles in recent years.
Inflation remains well within the RBI’s comfort zone. The Economic Survey 2026, citing IMF data, projects inflation to average around 2% in the current fiscal and remain below 4% in the coming year, supported by improved supply conditions and GST rationalisation.
The February MPC meeting comes just days after the Union Budget for FY27, which announced a 12% increase in capital expenditure and set the fiscal deficit target at 4.3% of GDP. Gross market borrowings are estimated at ₹17.2 trillion, higher than FY26 levels.
Given the size of the borrowing programme, economists believe yield-curve stability and bond market management will be a priority for the RBI, further strengthening the case for liquidity-focused measures over rate cuts.
External Comfort From Trade Deals
One key positive for the RBI this time is the reduction in external uncertainty. The India-US trade deal, which includes a cut in US tariffs on Indian goods to 18%, along with the recently signed India-EU FTA, is expected to boost exports, improve capital inflows, and support the rupee.
It is expected that the RBI will hold the repo rate at 5.25% and retain a neutral policy stance. With transmission still in progress, bond yields under pressure, and multiple macro variables yet to play out, the MPC is likely to remain in wait-and-watch mode.
While the door to future rate cuts remains open, the February 2026 policy decision is widely expected to mark a pause in the easing cycle, with liquidity management taking centre stage.
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