RBI Monetary Policy Feb 2026: Repo Rate Unchanged at 5.25%, GDP Growth Outlook Raised to 7.4%

Mumbai: In its first bi-monthly monetary policy review of 2026, the Reserve Bank of India (RBI) has decided to hit the pause button. On Friday, RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) unanimously voted to keep the benchmark repo rate unchanged at 5.25%.

While the decision was largely in line with market expectations, the central bank’s bullish stance on India's economic growth—coupled with a "neutral" policy stance—signals confidence in the domestic economy despite global headwinds.

Key Highlights of the February 2026 Policy

1. Repo Rate Steady: The key lending rate remains at 5.25%. Consequently, the Standing Deposit Facility (SDF) rate stands at 5.00%, and the Marginal Standing Facility (MSF) rate is at 5.50%.

2. Stance Remains 'Neutral': The MPC has decided to continue with a "neutral" stance, indicating that it is not committed to either hiking or cutting rates immediately but will act based on incoming data.

3. GDP Forecast Upgrade: In a major positive, the RBI has revised India’s real GDP growth projection for FY 2025-26 upwards to 7.4% (from the earlier 7.3%). The central bank cited robust private consumption, a revival in rural demand, and the government's continued capex push as key drivers.

4. Inflation Outlook: The inflation trajectory remains benign. The Consumer Price Index (CPI) inflation forecast for FY 2025-26 is projected at a comfortable 2.1%, with Q4 expected to see a slight uptick to 3.2% due to base effects.

Why Did RBI Hold Rates?

The decision to maintain the status quo comes after a cumulative 125 basis points (1.25%) rate cut cycle throughout 2025.

• The "Goldilocks" Scenario: Governor Malhotra described the Indian economy as being in a "Goldilocks" phase—where growth is strong, and inflation is low. This balance allows the central bank to wait and watch rather than aggressively cutting rates further.

• Global Uncertainty: With geopolitical tensions escalating and major global central banks like the US Federal Reserve delaying their own rate cuts, the RBI has chosen a path of caution to protect the rupee and ensure financial stability.

Impact on Your Wallet: EMIs and FDs

1. Home Loan & Car Loan EMIs:

• The Bad News: If you were hoping for an immediate reduction in your monthly installments, you are out of luck. Since the repo rate remains unchanged, banks are unlikely to lower their external benchmark lending rates (EBLR) immediately.

• The Good News: The pause ensures that interest rates will not go up. Borrowers can expect stability in their EMI outflows for the next couple of months. Experts believe that if inflation remains low, a rate cut could be on the cards later in 2026, which would eventually lower EMIs.

2. Fixed Deposits (FDs):

• For Savers: This is good news for senior citizens and conservative investors. With the RBI holding rates, banks will not be in a hurry to slash fixed deposit interest rates. The current high-interest regime for FDs is likely to continue for a little longer, offering investors a window to lock in funds at attractive rates (currently ranging between 7% to 8% for select tenures).

The Road Ahead

The RBI’s decision reflects a "wait-and-watch" approach. With the signing of historic trade deals with the US and EU, and a robust domestic manufacturing sector, the focus has shifted from fighting inflation to sustaining long-term growth. For the common man, while the cost of borrowing remains steady, the promise of a growing economy offers hope for better income prospects in the year ahead.RBI monetary policy February 2026, repo rate 5.25%, RBI Governor Sanjay Malhotra, India GDP growth forecast 2026, home loan EMI impact, fixed deposit rates 2026, inflation outlook India.