Policy pause continues as inflation cools but risks remain
The Reserve Bank of India's Monetary Policy Committee (MPC) on February 6, 2026 voted unanimously to keep the repo rate unchanged at 5.25%, extending the pause that began after a series of hikes and subsequent cuts in 2024–25. Governor Sanjay Malhotra said the decision reflects a "balanced" approach: headline inflation has eased closer to the 4% target, but food and global commodity prices remain a risk.
The policy stance was retained as "neutral", signalling that the RBI is prepared to move either way depending on how growth and inflation evolve. Markets had widely expected a status quo decision, and government bond yields were largely steady after the announcement.
Why the RBI held rates
According to the MPC statement and subsequent commentary, the key reasons for maintaining the repo rate at 5.25% include:
- Inflation near target, but not fully comfortable: Headline CPI has moved lower compared to 2025 averages, but the RBI is cautious about spikes driven by food, fuel and weather-related shocks.
- Growth still needs support: While GDP growth remains resilient, higher real rates could weigh on investment and consumption if tightened prematurely.
- Global uncertainty: Unclear paths for US and European interest rates, plus geopolitical tensions, argue for a steady hand rather than aggressive moves.
What this means for your home, car and personal loans
Since the repo rate is the benchmark at which the RBI lends to commercial banks, an unchanged repo rate at 5.25% means there is no immediate change in most floating-rate EMIs. However, the impact differs slightly across loan types:
- Home loans: Borrowers with repo-linked home loans will see EMIs remain at current levels. Banks are unlikely to cut rates meaningfully until they see clearer evidence of durable low inflation.
- Car and personal loans: These are often priced higher and reset less frequently. For now, new borrowers will continue to face roughly the same interest rates as in recent months.
- Fixed-rate loans: If you’ve locked in a fixed-rate loan, this decision does not affect your EMI at all.
For households, the message is: no extra EMI pain for now, but no big relief either. The RBI’s focus remains on keeping inflation under control before considering a more aggressive easing cycle.
Impact on deposits and savings
On the savings side, unchanged policy rates typically mean banks will also keep most fixed deposit (FD) and recurring deposit (RD) rates steady in the short term. Some banks may tweak special tenors or promotional schemes, but a broad-based fall in deposit rates looks unlikely immediately.
For conservative investors relying on FDs, this environment continues to offer better returns than the ultra-low rate period seen a few years ago, but they should still watch inflation-adjusted (real) returns.
Markets, rupee and what to watch next
Equity markets had largely priced in a status quo decision, but rate-sensitive sectors like banks, NBFCs, real estate and autos often react to the tone of the policy commentary. A neutral stance with a clear emphasis on data-dependence is typically seen as supportive for these sectors in the medium term.
The rupee is likely to be driven more by global risk sentiment and capital flows than by this single policy decision. However, a stable policy framework helps reduce volatility and supports foreign investor confidence.
Over the next few months, the MPC will watch:
- Upcoming inflation prints, especially food prices
- Global central bank actions and crude oil prices
- Domestic growth indicators like credit demand, investment activity and consumption
Bottom line
For now, the RBI has chosen continuity: repo rate at 5.25%, stance neutral. For most people, this means EMIs stay where they are, deposit rates remain broadly stable, and the central bank keeps its options open.
If inflation remains under control and growth momentum softens, rate cuts later in the year are possible, but not guaranteed. Until then, households and businesses may want to continue budgeting on the assumption that today’s borrowing costs will stick around for a while.
References
- RBI Monetary Policy Committee statement – February 2026 (official release)
- "RBI MPC Policy Meeting LIVE Updates" – The Indian Express
- "RBI Policy: Reserve Bank Keeps Interest Rates Unanimously Unchanged at 5.25%" – News18
- "RBI MPC Meet Feb 2026: Date, Time, Expectations" – Economic Times
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