Interest rates stable, ‘neutral’ stance maintained

The RBI Governor stressed that the Indian economy remains strong and the domestic inflation and growth outlook is positive. The Governor also made it clear that future monetary policy will be guided by the new inflation data based on the revised series. Earlier, in the year 2025, the Reserve Bank of India, adopting a liberal stance, had reduced the repo rate by a total of 125 basis points. In the last Monetary Policy Committee meeting of the year held in December 2025, the repo rate was further reduced by 25 basis points, bringing it down from 5.5% to 5.25%.

Know the cuts last year and when?

February: Adopting a cautious approach, the first cut of 25 basis points was made at the beginning of the year.

april: To maintain economic momentum, it was again reduced by 25 basis points for the second time.

june: This was the biggest cut of the year, where the Reserve Bank directly reduced the repo rate by 50 basis points.

December: During the last policy review at the end of the year, a final cut of 25 basis points brought the repo rate to 5.25%.

What did the Governor say on demand and consumption after the first MPC of 2026?

Highlighting the drivers of the economy, the Governor said improving corporate performance and sustained growth in the informal sector will boost manufacturing. On the demand front, rural demand remains stable, while urban consumption is expected to grow further. Further, Governor Malhotra pointed out that the recently concluded India-EU Free Trade Agreement and the potential India-US trade deal will provide strong support to the export momentum.

What did the Governor say on economic projections?

Expressing confidence over the future economic outlook, the RBI Governor has revised upward the growth rate estimates for the first and second quarter of the next financial year, which are expected to be 6.9% and 7% respectively. On the inflation front, inflation is estimated to be 2.1% for the current financial year, while it is expected to be 4% in the first quarter of FY 2027 and 4.2% in the second quarter. Speaking about the global situation, the Governor said that foreign exchange reserves are at a very healthy level of $723.8 billion at the end of January and the current account deficit is also expected to be ‘moderate’ in the current financial year.

RBI monetary policy

• Interest Rates and Trends: RBI has not made any change in the repo rate and has kept it at 5.25%. MPC has maintained its stance ‘neutral’.




• Increase in GDP estimates: The GDP growth forecast for the first (Q1) and second (Q2) quarter of FY 2027 has been revised upward, which is now expected to be 6.9% and 7%, respectively.




• Inflation Outlook: Retail inflation for the current financial year is estimated at 2.1%. At the same time, it is likely to be 4% in the first quarter of financial year 2027 and 4.2% in the second quarter. Barring precious metals, underlying inflation pressures remain calm.




• Big relief to MSME sector: The limit for unsecured loans for micro, small and medium enterprises has been doubled to Rs 20 lakh.




• Security cover on digital fraud: A framework will soon be brought in to provide compensation to customers up to Rs 25,000 for losses caused by digital fraud. Additionally, special measures have been proposed to protect senior citizens from digital fraud.




• Financial Market Reforms: Banks will now be allowed to give loans to real estate investment trusts. Also, branch opening rules will be relaxed for some types of NBFCs.




• Foreign exchange reserves: India’s foreign exchange reserves are at a very strong level of $723.8 billion.




• Export and Consumption: The Governor said that trade agreements will boost exports. Along with this, GST reforms, monetary ease and low inflation will support private consumption.




• Next meeting: The next meeting of the RBI MPC is scheduled for April 6 to 8, 2026.