RBI Keeps Repo Rate Unchanged at 5.25%: MSF, SDF Also Remains Same

The Reserve Bank of India (RBI) announced its latest monetary policy decision today, Friday, 6 February 2026. The Monetary Policy Committee (MPC), headed by RBI Governor Sanjay Malhotra, concluded its sixth and final bi-monthly policy review for FY26, held from 4 to 6 February, with the repo rate decision unveiled today.

Since February 2025, the RBI has reduced the repo rate by a total of 125 basis points. This February policy announcement comes shortly after the unveiling of the Union Budget 2026–27 and the recently announced India–US trade agreement.

RBI Kept Repo Rates Unchanged

The Reserve Bank of India on Friday kept the repo rate steady at 5.25% and maintained a ‘neutral’ stance on monetary policy. RBI Governor Sanjay Malhotra said the Marginal Standing Facility (MSF) rate remains at 5.50% and the Standing Deposit Facility (SDF) rate at 5.00%.

Inflation Outlook

The RBI revised the CPI inflation forecast for FY27, projecting 4.0% in Q1 and 4.2% in Q2. Core inflation, excluding the volatility of precious metals, is expected to remain range-bound, signaling that underlying price pressures are unlikely to accelerate sharply. For FY26, CPI inflation is projected at 2.1%, with Q4 FY26 at 3.2%. The full FY27 inflation projection will be released at the April MPC meeting alongside other updated macro forecasts.

Growth and Economic Outlook

Malhotra said India’s real GDP is expected to grow 7.4% over the previous year, reflecting a steady improvement in economic momentum. Real GVA is projected to expand 7.3%, driven by a strong services sector, a revival in manufacturing, and positive growth in construction. The RBI has deferred its full-year GDP projection for FY27 to the April policy review, pending the release of a new GDP series, which will also revise how key macro indicators are measured. Near-term growth forecasts were revised upward, with Q1 FY27 at 6.9% and Q2 at 7.0%.

Merchandise exports grew 1.9% year-on-year, supported by trade diversification efforts amid uneven global demand. India remains an attractive destination for FDI in greenfield projects, highlighting investor confidence despite global uncertainty. Foreign exchange reserves stood at $723.8 billion as of January 30, covering roughly 11 months of imports, while net outflows rose 5.8%.

Liquidity and Financial Conditions

System liquidity has stayed in surplus, averaging about ₹70,000 crore since the last MPC meeting and currently around ₹2 lakh crore following RBI measures in February. Transmission of past rate cuts has been substantial, with a cumulative 125 basis points reduction leading to a 105 bps fall in the weighted average lending rate (WALR) of scheduled commercial banks; the interest rate effect now stands at 94 bps. Malhotra noted that rates in the commercial paper and certificate of deposit markets tightened in January 2026.

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