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Informist, Friday, Feb. 20, 2026

 

NEW DELHI – Benign inflation and strong growth outlook gave the Reserve Bank of India's Monetary Policy Committee space to keep the policy interest rate unchanged in February, the minutes of the panel's Feb. 4-6 meeting, released Friday, showed. Members of the rate-setting panel gave little forward guidance beyond saying it would remain data-dependent going ahead.

 

On Feb. 6, the Monetary Policy Committee, in a unanimous decision, left the repo rate unchanged at 5.25%. The committee also retained its "neutral" policy stance, though external member Ram Singh was of the view that it should be changed to "accommodative". The committee had lowered the repo rate by 125 basis points in 2025.

 

"Growth prospects are looking up while inflation outlook remains broadly unchanged," RBI Governor Sanjay Malhotra said. "Moreover, several recent developments on the external front have provided room for greater optimism. Given the present state of the economy and its outlook--buoyant growth and benign inflation--I feel the current policy rate is appropriate."

 

Members noted that India's recent trade deal with the US and free trade agreement with the European Union have turned the external-sector outlook favourable. Measures announced in the Union Budget for the financial year 2026-27 (Apr-Mar) are also expected to boost growth, they said.

 

The RBI has raised its GDP growth projection for the June quarter of FY27 to 6.9% from 6.7% and for the September quarter to 7% from 6.8%. The finance ministry, in its Economic Survey for FY26, has projected GDP growth for FY27 in the range of 6.8–7.2%.

 

"As I have argued in the past, a growth rate above 7.5% appears realistic without building up price pressure," Singh said. "The potential growth rate seems to have inched up aided by productivity and efficiency gains from infrastructure and the technological advances in the last few years."

 

Singh, the minutes revealed, said a change in stance to "accommodative" would facilitate transmission of the rate cuts so far by exerting downward pressure on market rates, yields of sovereign and corporate bonds, and the rate spread between the two amid stable inflation and fiscal outlooks.

 

Further, filtering out the effect of increases in prices of precious metals, most members expect underlying inflation pressures to remain subdued. The inflation outlook does not suggest any concern of overheating, they noted.

 

"Going forward, food inflation is expected to pick up and turn positive in the coming months while non-food inflation, excluding precious metals, will continue to remain benign," RBI Executive Director Indranil Bhattacharyya said. "Supply-side developments remain favourable as international commodity prices, barring metals, remain largely contained while higher rabi sowing for most crops augurs well for agricultural production."

 

RBI Deputy Governor Poonam Gupta also said that as of now, the risk to inflation from external sources such as crude oil prices, commodity prices, or the pass-through of the exchange rate depreciation is perceived to be limited. Retail prices in India rose year on year in January, with the new series showing CPI inflation for the month at 2.75%. The new series is based on 2024 prices as the base year has been shifted to 2024 from 2012 in the old series. The RBI has forecast inflation for the March quarter at 3.2% and for FY26 at 2.1%. 

 

Most panel members expressed caution as the new GDP and CPI series data will provide a clearer lens on the growth–inflation balance going ahead. Some members also found it prudent to keep the rate on hold amid the ongoing transmission of past rate cuts. "...at this juncture, maintaining the status quo is a prudent action, as we await the new data series on both CPI and growth rates, and the transmission of the December policy rate cut is still happening," external member Nagesh Kumar said.  End

 

Reported by Pratiksha

Edited by Rajeev Pai

 

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