RBI Monetary Policy February 2026: Repo Rate Unchanged at 5.25%, Growth Outlook Remains Strong

The Reserve Bank of India monetary policy decision for February 2026 delivered continuity rather than surprise. As widely expected, the Monetary Policy Committee unanimously voted to keep the policy repo rate unchanged at 5.25%, maintaining its neutral stance for the second consecutive meeting.

RBI Governor Sanjay Malhotra struck a confident yet cautious tone, highlighting benign inflation, resilient growth indicators, and improving trade prospects, while also acknowledging rising global uncertainties and cautious domestic bond market sentiment. For investors, borrowers, and businesses, this policy offers clarity and stability at a time when global central banks remain on edge.

Key Takeaways at a Glance

• RBI kept the repo rate unchanged at 5.25% with a unanimous MPC vote
• Inflation remains below the tolerance band and is expected to stay benign in FY27
• Growth momentum continues, supported by strong domestic indicators and trade deals
• RBI announced consumer friendly measures on digital fraud compensation and mis-selling

RBI Monetary Policy Decision February 2026 Explained

The RBI’s decision to pause on interest rates reflects a careful balance between supporting growth and managing emerging global risks.

Governor Sanjay Malhotra stated that inflation remains well within the RBI’s comfort zone. Headline inflation is below the upper tolerance band, while core inflation continues to remain benign, barring some pressure from precious metals.

The MPC also retained its neutral policy stance, giving itself flexibility to respond to future developments rather than committing to immediate easing or tightening.

Inflation Outlook: Comfort for the Central Bank

One of the strongest pillars supporting the rate pause is the inflation outlook.

The RBI projects CPI inflation at 4% in Q1 FY27 and 4.2% in Q2 FY27. These levels are comfortably aligned with the central bank’s medium-term target, providing room to prioritise growth without risking price stability.

Governor Malhotra highlighted that underlying inflation pressures are subdued and well managed, which strengthens confidence in the current policy framework.

Growth Momentum Remains Intact

High-frequency indicators continue to signal healthy economic momentum. Manufacturing activity, services demand, and urban consumption trends suggest that growth remains resilient despite global challenges.

The Governor also pointed to landmark trade agreements with the European Union, the United States, and the UK as long-term growth enablers. These deals are expected to support exports, attract foreign investment, and strengthen India’s external sector over time.

From an investor perspective, this reinforces India’s relative strength compared to other major economies navigating slower growth cycles.

Geopolitical Risks and External Headwinds

While the domestic picture remains positive, the RBI did not downplay global risks.

Escalating geopolitical tensions are reshaping global trade and financial flows. The MPC acknowledged that external headwinds have intensified since the December policy meeting. These risks warrant caution, especially in managing capital flows, currency stability, and commodity price volatility.

This balanced assessment explains why the RBI chose policy continuity rather than aggressive action.

Bond Market and Liquidity Management

Domestic bond market sentiment remains cautious, driven largely by concerns around fiscal sustainability and government borrowing.

Deputy Governor Rabi Sankar clarified that while gross borrowing numbers appear large, they must be viewed in context. Net borrowing remains manageable, and additional funding through treasury bills will help smoothen the yield curve.

Governor Malhotra reiterated that liquidity management remains a continuous process. The RBI will continue using tools such as variable rate repos, open market operations, and targeted liquidity measures to ensure effective transmission of policy rates.

Key Regulatory and Consumer Friendly Announcements

Beyond rates, the policy included several important regulatory signals.

The RBI confirmed that banks continue to maintain loan-to-value ratios for gold loans, reinforcing prudence in retail lending.

More importantly, the central bank announced a proposal to compensate customers up to ₹25,000 for small-value digital frauds. Draft guidelines on mis-selling and a framework for compensation in small fraud cases will also be issued. These steps are aimed at improving trust, transparency, and customer protection in the banking system.

Impact on Indian Markets and Key Sectors

Equity Markets

Stable interest rates generally support equities by providing visibility on borrowing costs and earnings outlooks. Rate-sensitive sectors such as banking, real estate, and automobiles are likely to benefit from policy continuity.

Real Estate

Industry experts believe stable rates help sustain homebuyer sentiment, especially in end-user driven markets. Predictable borrowing costs also improve developers’ cash flow planning. Mid-income and affordable housing segments are expected to remain resilient.

Banking and Financials

Banks benefit from steady transmission and predictable funding costs. With liquidity support continuing, credit growth is likely to remain stable without undue stress on margins.

What This Means for Investors

The February 2026 RBI monetary policy reinforces a message of stability and confidence in India’s macro fundamentals. For investors, this environment favours disciplined, research-backed decision-making rather than reactive trading.

Understanding how policy decisions impact sectors, yields, and asset allocation is crucial. This is where platforms like Swastika Investmart add value. As a SEBI-registered brokerage, Swastika Investmart offers robust research tools, technology-driven platforms, strong customer support, and a clear focus on investor education.

Frequently Asked Questions

Why did RBI keep the repo rate unchanged at 5.25%?
The RBI maintained rates due to benign inflation, strong growth momentum, and rising global uncertainties that warrant a cautious approach.

What is RBI’s inflation outlook for FY27?
The RBI expects CPI inflation at around 4% in Q1 FY27 and 4.2% in Q2 FY27, indicating price stability.

How does this policy impact home loan borrowers?
Stable repo rates support steady home loan interest rates, helping borrowers plan repayments with greater certainty.

What new consumer protection steps did RBI announce?
The RBI proposed compensation up to ₹25,000 for small-value digital frauds and plans to issue guidelines on mis-selling.

Is a rate cut expected in the near term?
The RBI remains data dependent. Future actions will depend on inflation trends, growth conditions, and global developments.

Final Thoughts

The RBI monetary policy decision for February 2026 underscores confidence in India’s economic resilience while staying alert to global risks. With inflation under control and growth holding firm, the focus remains on sustaining momentum without compromising stability.

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