Will RBI Slash the Repo Rate in Next MPC Meeting in February?

As India settles into 2026, attention has turned to the Reserve Bank of India’s (RBI) next monetary policy decisions. After substantial rate cuts in 2025, markets and economists are asking: will the Monetary Policy Committee (MPC) continue easing or pause? Understanding this is important because changes in the policy repo rate influence borrowing costs, consumer demand, investment, and broader economic activity across the country.

Recent RBI Policy Actions and Context

In late 2025, the MPC reduced the repo rate by 25 basis points to 5.25 per cent, marking a sequence of easing moves against a backdrop of lower inflation and resilient growth. The central bank also retained a neutral stance despite this cut, signalling a careful balancing act between price stability and growth support.

Earlier in the year, additional rate cuts and revised forecasts reflected favourable conditions: inflation significantly softened and GDP growth projections were revised upward for FY 2025-26. The cumulative effect of these measures has already made credit cheaper and aimed to stimulate demand.

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However, recent data shows inflation creeping back closer to target and economic activity holding firm, which complicates the case for further ease.

What Economists Expect from the Next MPC Meeting

According to a Reuters poll of economists conducted in late January 2026, the consensus expectation is that the RBI will keep the repo rate unchanged at 5.25 per cent at the upcoming February MPC meeting. Around 80 per cent of surveyed economists believe the MPC will maintain the current level through much of 2026, suggesting that further cuts are unlikely unless new data significantly alters the economic outlook.

Most participants in the poll pointed to a significant run of rate cuts already delivered (125 basis points since early 2025) and current macro conditions—such as inflation remaining comfortably within (or even below) target—as reasons to pause further easing.

There are still a few voices forecasting a modest rate cut later in the year if soft inflation persists, but such expectations are in the minority.

Forces Shaping the RBI’s Call

Two key forces frame the RBI’s decision:

Inflation and Price Stability: Inflation data over recent months has shown volatility, with a modest uptick in core prices even as headline inflation remains subdued. Central bankers generally prefer to see sustained trends before adjusting rates again.

Growth Dynamics: India continues to post solid economic expansion, with strong demand in several sectors. This reduces the immediate need for additional monetary stimulus.

Also Read - RBI Holds Rates: How 5.25% Repo Affects Home Loans And Deposits

In this milieu, holding rates steady allows policymakers to assess how past rate cuts transmit through the economy, without adding undue fuel to growth that might later stoke inflation.

What a Pause Means for Markets and Households?

For borrowers, a pause means that existing loans and EMIs benefit from lower past rate cuts but no immediate additional relief. For the broader economy, a period of rate stability can anchor expectations, especially in investment and savings decisions.

Financial markets often interpret a pause as a sign that the central bank believes the current monetary stance is appropriate for the near term. A steady policy rate also gives banks and non-bank lenders clearer signals for pricing credit products and managing liquidity.

Conclusion

While the RBI has cut interest rates significantly over the past year to support the economy, most economists now believe that further cuts in 2026 are unlikely, at least in the near term. Instead, the central bank is expected to maintain the repo rate at 5.25 per cent, watching how previous cuts play out, balancing inflation risks against growth prospects. 

Any future rate decision will hinge closely on fresh inflation data, growth figures, and the broader global economic backdrop.