RBI headquarters in Mumbai.
The Monetary Policy Statement was announced by the Reserve Bank of India’s Monetary Policy Committee (MPC) on 6 February 2025.
The MPC has unanimously decided to maintain the key policy rate as it is. This status quo is a strategic pause for the banking system to achieve significant structural shifts in credit and savings transmission.
Let us see the MPC statement in detail now.
MPC Keeps Rate Unchanged – February 2026
The MPC has unanimously kept the key policy rate (i.e. repo rate) unchanged at 5.25 percent.
Consequently, the Standing Deposit Facility (SDF) rate shall stand adjusted at 5 percent and the Marginal Standing Facility remains at 5.50 percent.
The MPC continues to keep a neutral policy stance to ensure that inflation aligns with the target gradually and supports growth.
MPC on Gross Domestic Product (GDP) Estimates
The MPC stated that as per First Advance Estimates, the real GDP is estimated to grow by 7.4 percent Year-on-Year (Y-o-Y) in 2025-26. On the supply side, Gross Value added (GVA), and a growth of 7.3 percent is supported by the services sector, a resilient agricultural sector and a recovery in manufacturing activity.
The outlook for private consumption is positive, driven by a robust services sector, GST rationalisation, a good rabi season, monetary easing, and low inflation.
Investment momentum is expected to continue, fuelled by strong credit growth, increased government capital expenditure, supported by strong balance sheets of both corporate and finaincial institutions.
The MPC has considered all these factors while forming its policy. On the risks side, geopolitical tensions, an uncertain global trade enivironment, international commodity prices and international financial market volatility are also taken into consideration.
The MPC has estimated that the real GDP growth projections for Q1:2026-27 and Q2 are revised upwards to 6.9 per cent and 7.0 per cent, respectively, and also stated that the risks were evenly balanced.
Note: The MPC added a footnote saying: “Projections for full year 2026-27 will be set out in the Monetary Policy Resolution to be announced in April 2026 after incorporating the new GDP and CPI series (base 2024=100) to be released on February 27 and February 12, 2026, respectively.”
MPC on Inflation
The MPC also stated that CPI headline Inflation has remained low at 0.7 percent in November and 1.3 percent in December, 2025. Food group continued its deflation and fuel group inflation remained moderate in November and December, 2025.
Core inflation remained low and stable, even though global gold and silver prices became more expensive. The core inflation, excluding gold, remained stable at 2.6 percent in December 2025.
Good kharif production, adequate buffer stocks of foodgrains and favourable rabi sowing makes the food supply brighten for the near-term outlook .
While core inflation (excluding prices of precious metals) is expected to be range-bound, the inflation outlook faces upside risks from geopolitical uncertainty, fluctuating energy prices, and negative weather impacts.
After considering all these factors, the MPC estimated that, for 2025-26, inflation will be at 2.1 percent with Q4 at 3.2 percent. In 2026-27, CPI inflation for first two quarters is estimated at 4.0 percent (Q1), and 4.2 percent (Q2).
It also stated that ‘the risks are evenly balanced’.
MPC Stance
The MPC observed that since the last policy meeting, external tensions have deepend though the successful trade deals have estimated a strong economic outlook.
Near-tem domestic inflation and growth outlook remain positive, it added.
The MPC also said: “The outlook for CPI inflation in Q1:2026-27 and Q2 continues to be benign and near the inflation target. The slight upward revision in the inflation outlook is primarily due to increase in prices of precious metals, which contribute about 60-70 basis points. The underlying inflation continues to be low.”
According to the MPC, growth remains resilient and the outlook remains favourable.
Therefore, the policy repo rate has been kept unchanged at 5.25 percent by a unanimous decision.
As a result, the MPC decided to maintain its neutral position by a 5-1 vote.
One member (Prof. Ram Singh), however, voted for an accommodative stance.
Most notably, the Governor of the RBI today announced several additional measures to improve financial access and consumer protection as follows:
The minutes of the meeting will be published on February 20, 2026 and the next meeting of the MPC is scheduled for April 6-8, 2026.
Author’s view
It’s important to note that the MPC’s 125 basis-point cut occurred last year. By doing so, it has already done enough ‘heavy lifting’; and therefore, the key interest rate has remained unchanged.
The MPC appears to be waiting to observe the complete impact of its earlier reductions due to the inherent 6-9 month transmission delay.With inflation staying within the target, the RBI also has the policy capacity to continue with the present stance.
This status quo provides an essential window for the banking system to align deposit growth currently at 9.1 percent — with the robust 12.8 percent expansion in commercial credit.
The MPC subtly supports the mobilisation of domestic savings, and hence the present surge in investment activity remains sustainably funded without creating any structural imbalance in the financial system.
Consequently, the RBI is compelled to adopt a ‘wait-and-watch’ stance before the April MPC meeting.With the new CPI (2024) and GDP (2022-23) series, the RBI will have the necessary information to guide its policy projections and decisions for the entire year.
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