RBI Governor Malhotra Signals Core Inflation Stability: Repo Rate Held Steady at 5.25%

Market snapshot: At the conclusion of the three-day Monetary Policy Committee (MPC) meeting on February 6, 2026, the Reserve Bank of India (RBI) unanimously decided to maintain the policy repo rate at 5.25%. Governor Sanjay Malhotra highlighted that while headline inflation has seen slight upward pressure due to specific categories, core inflation remains within a stable and manageable range. The decision aligns with market expectations of a 'wait-and-watch' approach following the cumulative 125 basis point rate cuts implemented since early 2025.

Summary: The RBI kept interest rates unchanged at 5.25% in its February 2026 meeting, citing stable core inflation and a neutral policy stance while projecting FY26 GDP growth at 7.4%.

SAHI Perspective

The RBI's decision to pause reflects a strategic consolidation phase. By maintaining a neutral stance, the central bank is preserving flexibility to address global uncertainties, including the potential impacts of the newly announced India-US trade deal and the Union Budget 2026-27. For investors, this indicates a period of policy stability, though the banking sector may continue to face tight liquidity conditions. The emphasis on 'stable' core inflation suggests that any further rate actions will be highly data-dependent, particularly awaiting the new CPI series data next week.

Closing Insight

With core inflation stability anchored and growth projections nudged higher, the RBI is steering the Indian economy through a 'Goldilocks' phase of balanced growth and price control.

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