RBI holds repo rate at 5.25%, raises FY26 growth forecast to 7.4%
&imwidth=600&imheight=450&format=webp&quality=medium "RBI holds repo rate at 5.25%, raises FY26 growth forecast to 7.4%")
RBI Governor Sanjay Malhotra Photograph: (ANI)
The Reserve Bank of India has kept the repo rate unchanged at 5.25 per cent in its February policy review, pausing its rate cutting cycle after cumulative cuts of 1.25 per cent in 2025.
The Reserve Bank of India (RBI) on Friday (Feb 6) pressed pause on its rate-cutting cycle, keeping the benchmark repo rate unchanged at 5.25 per cent in its February policy decision. The move comes after the Indian central bank delivered cumulative rate cuts of 1.25 per cent through 2025. The current policy rate now stands at its lowest level since July 2022.
RBI Governor reveals reason behind rate cut pause
RBI Governor Sanjay Malhotra, in a statement, said the decision to hold rates steady was shaped by slightly higher inflation projections and continued strength in economic growth.
Also read | What Budget 2026 means for your salary: Is there a change in income tax slabs? All you need to know
"Since the last policy meeting, external headwinds have intensified. Though the successful completion of trade deals augurs well for the economic outlook. Overall, the near-term domestic inflation and growth outlook remain positive," he said. However, he noted that the near-term domestic inflation and growth outlook remains positive.
Growth outlook improves
Trending Stories
)
)
&im=FitAndFill=(700,400))
)
)
)
)
)
)
)
)
)
&im=FitAndFill=(700,400))
)
)
)
&im=FitAndFill=(700,400))
&im=FitAndFill=(700,400))
&im=FitAndFill=(700,400))
)
)
&im=FitAndFill=(700,400))
&im=FitAndFill=(700,400))
)
)
&im=FitAndFill=(700,400))
)
)
)
)
The central bank struck an optimistic tone on India’s economic performance, noting that the country continues to outperform expectations and remains the world’s fastest-growing major economy. Reflecting that confidence, the RBI raised its growth forecast for FY26 to 7.4 per cent. The Governor said the Indian economy continues on a steady improving trajectory, with real GDP poised to register a significantly higher growth of 7.4 per cent in the current year compared to the previous year.
Malhotra also pointed out that the improving performance of the corporate sector and sustained momentum in the informal sector are expected to boost manufacturing activity, while construction sector growth is projected to remain firm.
Also read | Budget 2026: FM Sitharaman confirms India's new Income Tax act to take effect from THIS date
Officials noted that recent developments, including progress in an India-EU trade agreement and early signs of a US-India trade resolution, along with other trade agreements, are expected to support exports over the medium term.
Inflation seen rising slightly
While the overall price outlook remains stable, the RBI marginally raised its inflation projection to 2.1 per cent for the next fiscal year. "Unfavourable base effects stemming from large decline in prices observed during Q4 of last year, i.e., 2024-25, would lead to an uptick in year-on-year inflation in Q4 this year," the Governor stated.
