RBI MPC Feb 2026: Repo Rate Held at 5.25%, Keeps Unchanged

RBI kept the repo rate unchanged at 5.25%. That was expected.

What mattered more were the small upgrades inside the inflation projections and a near-term data change that could make inflation prints look higher even if your day-to-day prices do not change much.

Here’s the MPC outcome, plus what it could mean for borrowers, savers, and markets.

RBI MPC decision snapshot

In simple, RBI has paused after a fairly aggressive easing cycle, and it now wants earlier moves to transmit fully into the system.

Growth view: RBI’s FY26 and early FY27 GDP lens

RBI’s growth projection for FY26 real GDP is 7.4% YoY. The policy commentary also points to private consumption as a key driver.

• Q1 FY27 GDP: 6.9%
• Q2 FY27 GDP: 7.0%

The message is straightforward: growth looks okay, so RBI can afford to wait and watch inflation signals before doing anything further.

The real headline: inflation forecasts moved up, despite soft recent CPI

India’s headline CPI has stayed muted. December printed at 1.3%, and inflation has remained under 2% for the last six months, mainly because food inflation has cooled sharply.

Even so, RBI nudged its inflation projections upward. The change is small, but the signal matters.

RBI CPI forecast revisions (latest vs earlier)

Core inflation: range-bound, but RBI is still cautious

Governor Sanjay Malhotra noted that core inflation (excluding volatile items such as precious metals) is expected to remain range-bound.

This matters because it suggests RBI is not seeing a fresh, broad-based inflation problem yet. At the same time, it is also not in a hurry to cut again just because headline CPI has been low recently.

The big upcoming change: CPI, GDP, and IIP base year shifting to 2024

India is preparing to shift the base year for GDP, CPI, and IIP from 2011–12 to 2024. The new series is expected to be rolled out soon

Why you should care: a base-year change can alter what the inflation number looks like, even if underlying price dynamics do not change dramatically.

So if CPI prints trend higher from here, part of it could be a measurement shift, not just a sudden jump in real-world prices.

Liquidity: surplus stays, and RBI wants transmission

Liquidity remains in surplus.

• Average surplus since the last MPC: ~₹70,000 crore
• Current estimate (after recent RBI measures): close to ₹2 lakh crore

RBI did not announce fresh OMO steps in this meeting. The broader message is that it wants earlier rate cuts to transmit fully, while staying ready to keep liquidity comfortable.

Forex reserves: a strong buffer

India’s forex reserves are around USD 723.8 billion, supported by steady capital flows.

In practical terms, strong reserves usually act as a cushion during global risk events and help reduce stress in domestic financial conditions.

What this MPC means for borrowers, savers, banks, and NBFCs

1. Borrowers (home loan, auto loan, business loan)

Since repo is unchanged, immediate rate relief is less likely. The bigger story is still the transmission of the earlier 125 bps easing into lending rates over time.

2. Savers (FDs, short-term instruments)

A pause often helps deposit rates stay supported for longer. If inflation optics firm up, banks may not rush to cut deposit rates.

3. Banks and NBFCs

Overall, the policy outcome looks broadly neutral for banks and NBFCs. Liquidity remains supportive, even without new OMO announcements.

4. Long-term investors

An MPC pause is not a signal to change long-term plans overnight. If anything, it is a reminder to keep portfolios aligned to goals and risk appetite, not policy-day headlines.

Key takeaways

• Repo held at 5.25%, unanimous decision, pause after 125 bps easing since Feb 2025.
• Inflation projections were nudged up across FY26 and early FY27.
• New CPI base year (2024) could make inflation prints look higher by 20–40 bps.
• Liquidity remains surplus, RBI wants transmission, no fresh OMO signal.
• Forex reserves remain strong at $723.8 bn.

FAQs

1. What happened in RBI MPC Feb 2026?

RBI held the repo rate at 5.25% after a cumulative 125 bps cut since Feb 2025. The decision was unanimous, and RBI signalled a pause to let past cuts transmit while it tracks inflation risks.

2. What are the SDF and MSF rates now?

After the Feb 2026 MPC, SDF is 5.00% and MSF/Bank Rate is 5.50%, while repo remains 5.25%.

3. Why did RBI hold rates even with low recent CPI?

Because RBI is not assuming the recent low inflation will automatically persist. It slightly raised its forward inflation projections and is also watching how upcoming CPI series changes could affect reported prints.

4. What does “CPI base year shift to 2024” mean?

It means the reference year used to calculate CPI weights and comparisons is being updated from 2011–12 to 2024. This can change the reported inflation rate due to updated consumption baskets and weights.

5. Can inflation look higher even if prices do not change much?

Yes. Economists caution the new CPI series may have an upward bias of 20–40 bps due to higher weights for core items and newer categories like e-commerce and OTT services.

6. What does surplus liquidity mean for loan rates?

Surplus liquidity generally supports easier financial conditions and helps past policy moves transmit. RBI has indicated it will act proactively to keep liquidity adequate.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Any references to companies or financial figures are for discussion and understanding of business models and reported results. Please consider consulting a qualified professional before taking any financial decision.