RBI Key Policy Rate Unchanged.. 2026-27 GDP for 1st and 2nd quarters pegged at 6.9%, 7%

Mumbai, Feb 6: India’s central bank on Friday kept its key policy rate unchanged and maintained a neutral policy stance, citing easing inflation pressures, strong economic fundamentals, Reserve Bank of India Governor Sanjay Malhotra said after the Monetary Policy Committee (MPC) meeting.
The Monetary Policy Committee (MPC) unanimously decided to hold the policy repo rate at 5.25% at the conclusion of its monetary policy review. All other policy rates were also left unchanged.
Malhotra said geopolitical tensions remain elevated and global trade pressures are rising, but the Indian economy continues to show resilience.
The RBI projected retail inflation at 3.2 percent in the fourth quarter of the current fiscal year and 2.1% for the full year. Inflation is expected to rise to 4.0% in the first quarter of FY27 and 4.2% in the second quarter, largely due to a sharp increase in gold and silver prices, the governor said.
The central bank maintained that monetary policy decisions going forward would be guided by incoming inflation data based on a revised series.
India’s foreign exchange reserves stood at a healthy USD 723.8 billion at the end of January, Malhotra said, adding that the current account deficit is expected to remain moderate during the current fiscal year.
He added that trade agreements with the European union and the United States, which are either concluded or in sight, are expected to provide further momentum to growth.
The RBI projected gross domestic product (GDP) growth at 7.3% for the current fiscal year and raised its growth forecasts for the first and second quarters of the next fiscal year to 6.9% and 7.0%, respectively.
The central bank had cut the repo rate by a cumulative 1.25 percentage points over four moves last year. In its previous meeting in December, it reduced the rate by 25 basis points to 5.25%.