RBI Governor Highlights Core Inflation Stability: A Deep Dive into the February 2026 Monetary Policy

Market snapshot: The Reserve Bank of India's Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its final meeting of the 2025-26 fiscal year on February 6, 2026. The committee unanimously decided to maintain the repo rate at 5.25%, following a cumulative reduction of 125 basis points since early 2025. A standout observation from the Governor's address was the resilience of core inflation, which remained steady at 2.6% when excluding the volatile impact of precious metals like gold and silver.

Summary: RBI maintains repo rate at 5.25% with a 'neutral' stance; core inflation (ex-gold) stays steady at 2.6% while overall FY26 growth forecast is raised to 7.4%.

Key Takeaways

• Monetary Pause: Repo rate held at 5.25% to evaluate the impact of previous easing cycles totaling 125 bps.
• Inflation Outlook: Headline CPI inflation for FY26 is projected at a benign 2.1%, though precious metals add roughly 50 bps of volatility.
• Growth Momentum: India's GDP growth for FY26 is revised upward to 7.4%, supported by a landmark trade deal with the US and resilient domestic demand.

SAHI Perspective

The RBI is navigating a 'Goldilocks' phase—characterized by high growth and low inflation. By highlighting core inflation excluding gold, the central bank is signaling to the markets that underlying price pressures are well-contained. The decision to maintain a 'neutral' stance reflects a strategic pause to monitor external headwinds and global monetary divergence, particularly as the US Fed and Bank of England also hold rates steady.

Closing Insight

The RBI's focus on 'ex-gold' core inflation provides a clearer map of domestic economic health, stripping away external noise to reveal a stable foundation for FY27.

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