RBI Policy: Repo Rate Steady at 5.25%

New Delhi, February 6, 2026: In a move that signals both stability and cautious optimism, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announced on February 6, 2026, that it will keep the repo rate unchanged at 5.25%.

Led by Governor Sanjay Malhotra, the committee voted unanimously to maintain a “neutral” stance, following a year of significant easing where rates were slashed by a cumulative 125 basis points. This “status quo” reflects a central bank that is confident in India’s growth but remains watchful of global shifts and minor price pressures.

GDP Growth: India Remains a Global Bright Spot

The RBI has painted a robust picture of the Indian economy. For the current financial year (FY26), the central bank has pegged real GDP growth at a strong 7.4%.

Looking ahead to the next fiscal year (FY27), the outlook remains positive:

• Q1 FY27: Revised upward to 6.9% (from 6.7%).
• Q2 FY27: Revised upward to 7.0% (from 6.8%).

This resilience is fueled by a “buoyant” services sector, a recovery in manufacturing, and strong domestic demand. Additionally, a landmark trade deal with the U.S. has reduced tariff pressures, further boosting the economic momentum.

Inflation: The 4% Target in Sight

Inflation management remains the RBI’s primary success story this cycle. The headline CPI inflation for FY26 is projected at a benign 2.1%. However, the Governor flagged a temporary “uptick” due to base effects and rising precious metal prices.

• Near-term: Inflation is expected to rise to 3.2% in the January–March 2026 quarter.
• Next Year: Projections for Q1 and Q2 of FY27 stand at 4.0% and 4.2% respectively, staying aligned with the RBI’s medium-term target of 4%.

What This Means for Your Wallet

1. Home & Car Loan EMIs

For the millions of borrowers with loans linked to the Repo Linked Lending Rate (RLLR), the news is a double-edged sword. While you won’t see another immediate reduction in your monthly payments, your EMIs will remain stable. Since the RBI has already cut rates by 1.25% over the past year, most borrowers are already enjoying the lowest interest rates in recent history.

2. Fixed Deposits (FDs)

If you are a saver, the pause is good news. When the RBI stops cutting rates, banks typically stop lowering the interest they offer on Fixed Deposits. With inflation projected at just 2.1% for the year and FD rates still relatively attractive, “real returns” (interest rate minus inflation) for depositors remain at a very healthy level.

3. Digital Safety Net

In a notable “pro-consumer” move, the RBI also proposed a framework to compensate victims of digital fraud up to ₹25,000 for small-value losses. This adds a layer of security for the growing number of UPI and digital banking users.

The Bottom Line

The RBI’s decision to hold the line at 5.25% suggests that the era of aggressive rate cuts has paused. For now, the central bank is letting the previous cuts “soak” into the economy, ensuring that growth stays high while keeping a steady hand on the inflation thermostat.