Economists expect the RBI to stay on hold in February, with policy focus shifting to transmission and currency stability.
Summary:
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A Reuters poll shows the Reserve Bank of India is expected to hold the repo rate at 5.25% at its February 4-6 policy meeting.
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Most economists also see rates staying unchanged through 2026, after cumulative cuts of 125bp since early 2025.
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Inflation is forecast to remain benign in the near term, while growth stays robust but government-led.
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The RBI faces a trade-off between supporting growth and stabilising the rupee, which has hit record lows.
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Liquidity conditions remain a focus, with the RBI taking steps to improve policy transmission.
The Reserve Bank of India is widely expected to keep interest rates unchanged at its February policy meeting, with most economists seeing little urgency for further easing after a substantial run of rate cuts, according to a Reuters poll.
In the January 19–28 survey, 59 of 70 economists forecast the RBI’s Monetary Policy Committee would leave the repo rate at 5.25% at the conclusion of its February 4–6 meeting. Only 10 respondents expected a further 25bp cut, while one anticipated a larger move. The majority also expect the policy rate to remain at 5.25% through the end of 2026.
The RBI has already lowered borrowing costs by 125 basis points since February 2025, and economists say the combination of subdued inflation and solid growth has reduced the need for additional stimulus. Inflation is forecast to average 2.1% this fiscal year, before rising to around 4.0% next year, while economic growth is seen at 7.4% this year, easing to 6.7% thereafter.
However, the growth mix remains uneven. Analysts note that recent momentum has been driven largely by government spending, with private investment still lagging despite easier monetary conditions. Against that backdrop, economists argue the RBI’s focus has shifted from delivering further cuts to ensuring existing policy support is transmitted effectively across the economy.
The central bank is also contending with pressure on the currency. The rupee has fallen to record lows amid foreign equity outflows, forcing the RBI to balance domestic policy objectives with efforts to stabilise the exchange rate. Some economists say currency intervention has tightened liquidity, blunting the impact of earlier rate cuts.
To address this, the RBI has recently announced measures to inject liquidity through bond purchases, FX swaps and repo operations. Economists say these steps should help ease funding pressures and improve transmission without altering the policy rate.
