Top News

MonetaryPolicy – Reserve Bank of India Governor Sanjay Malhotra is scheduled to announce the outcome of the latest Monetary Policy Committee meeting at 10 am today, bringing to a close three days of detailed discussions that began on February 4 and concluded on February 6. The announcement is expected to clarify the central bank’s near-term policy direction at a time when inflation remains low and economic growth shows signs of stability.

Policy Deliberations Focused on Growth and Price Stability

The three-day MPC meeting followed the standard format, with members reviewing domestic and global economic conditions, financial market trends, and inflation dynamics. A key agenda item was the policy repo rate, which determines short-term borrowing costs in the economy and plays a central role in shaping lending rates across banks and financial institutions.

With recent data pointing to moderated inflation and steady demand conditions, the committee’s decision is anticipated to offer insights into how the RBI plans to balance growth support with long-term price stability.

Background of Sustained Monetary Easing

The current policy review comes after a prolonged phase of monetary accommodation by the central bank. Over the past year, the RBI has taken several steps to lower borrowing costs in order to support economic activity. Since February last year, the policy repo rate has been reduced by a cumulative 125 basis points.

These measures were aimed at stimulating credit flow, encouraging investment, and sustaining consumption, while ensuring that inflation remains within the central bank’s comfort range.

Expectations of Status Quo on Interest Rates

Market participants are largely expecting the RBI to maintain existing policy settings in this meeting. A recent report by Nuvama Research suggested that the central bank is likely to keep the policy repo rate unchanged and continue with a neutral policy stance.

The report noted that the transmission of earlier rate cuts to bank lending rates is still progressing gradually. At the same time, government bond yields have shown limited responsiveness, indicating that additional rate reductions may not be immediately effective.

Greater Emphasis on Liquidity Management

Given these conditions, analysts believe the RBI may place greater emphasis on managing liquidity in the banking system rather than altering interest rates further. Ensuring adequate liquidity is seen as a way to support credit availability without unsettling financial markets or creating inflationary pressures.

This approach would allow the central bank to monitor how previous policy actions filter through the economy before considering any additional changes.

Recap of the December Policy Decision

At the previous MPC meeting held in December, the RBI announced a 25-basis-point reduction in the policy repo rate, lowering it to 5.25 percent. The decision was communicated by Governor Sanjay Malhotra on December 5, following deliberations conducted between December 3 and December 5.

Alongside the rate cut, the central bank also updated its assessment of economic growth, reflecting stronger-than-anticipated domestic demand conditions.

Revised Growth Outlook for the Current Fiscal Year

In its December policy statement, the RBI projected that the Indian economy would expand by 7.3 percent during the current fiscal year 2025–26. This estimate represented an upward revision of about half a percentage point from the earlier forecast.

The improved outlook was attributed to resilient consumption, better investment activity, and sustained momentum across key sectors of the economy.

Latest Inflation Trends Remain Benign

On the inflation front, recent official data continues to suggest a comfortable environment. According to figures released by the Ministry of Statistics and Programme Implementation, consumer price inflation based on the Consumer Price Index stood at 1.33 percent year-on-year in December 2025 on a provisional basis, compared with December 2024.

The modest increase during the month was mainly driven by higher prices in categories such as personal care items, vegetables, meat and fish, eggs, spices, pulses, and related food products.

Market Attention on Today’s Announcement

The outcome of today’s MPC decision is expected to be closely tracked by financial markets, economists, and businesses. The policy stance outlined by the RBI will provide important signals about its priorities in the coming months, particularly as inflation remains subdued and growth indicators stay broadly positive.