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Informist, Friday, Feb. 6, 2026

MUMBAI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's sixth bi-monthly monetary policy statement for 2025-26 (Apr-Mar) detailed on Friday:

BANKERS

RADHIKA RAO, EXECUTIVE DIRECTOR AND SENIOR ECONOMIST, DBS BANK

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The decision to hold rates was anchored in the Monetary Policy Committee's favourable assessment of growth and inflation dynamics, ahead of a planned overhaul of the CPI and GDP series later in the month.

RBI Governor Sanjay Malhotra flagged a range of factors behind the recent uptick in bond yields and underscored the authorities' readiness to respond pre-emptively. Looking beyond February, we expect the RBI to maintain an extended pause, supported by a positive cyclical upswing and confidence effects stemming from the successful conclusion of US trade negotiations.

We also anticipate additional open market operations over this and the next quarter, with any such measures likely to be announced outside the policy cycle. 

(Shubham Rana)

V.R.C. REDDY, HEAD OF TREASURY, KARUR VYSYA BANK

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RBI stays the course with a strategic pause. The policy reflects a clear focus on macro-financial stability, with the pause being a strategic one and fully consistent with the Monetary Policy Committee's previous actions and guidance.

The upward revisions to both CPI inflation and GDP growth have further narrowed the space for any near-term rate cuts. In that context, the earlier market expectations of one more cut before the end of the cycle have largely faded. The MPC's assessment suggests that the current repo rate is broadly appropriate for prevailing macroeconomic conditions.

On the liquidity front, the RBI has reiterated its commitment to maintaining adequate system liquidity, which provides comfort to money markets. While no OMO purchases were announced in this policy, the RBI has kept its options open, leaving room for liquidity management operations as and when required.

Overall, the policy delivered no major surprises and was well aligned with market expectations.

Bond yields hardened marginally by about 4-5 basis points in the immediate reaction. Going ahead, an extended pause in policy rates is likely to translate into range-bound trading in the bond market, with demand–supply dynamics and domestic liquidity conditions emerging as the key levers driving market movements. The benchmark 10-year yield is likely to trade in a broad range of 6.60–6.80% in the near term, supported by the RBI's calibrated and predictable policy approach. 

(Priyasmita Dutta)

ECONOMISTS

MADAN SABNAVIS, CHIEF ECONOMIST, BANK OF BARODA

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The policy has left repo rate unchanged at 5.25% as expected and hence the markets have been quite unaffected. Quite expectedly too there have been no forecasts made on GDP and inflation next year as the new series are expected this month. Interestingly, while there is assurance on liquidity supply by RBI, no measures have been announced which means that they will be announced need based. 

Again, in line with the push given by the Budget to micro, small, and medium enterprses, the RBI has increased the limit for collateral-free loans to INR 2 million. Hence there seems to be steady follow-up action to the Budget announcements. 

We may expect that the rate cycle has ended and 5.25% repo rate would stand for some time before any action is taken, which is more likely in upward direction if inflation turns out to be higher in future. 

(Krity Ambey)

ANITHA RANGAN, CHIEF ECONOMIST, RBL BANK

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As expected, RBI held the policy rate unchanged at 5.25%, keeping the stance neutral. However, the surprise was all six members voting unanimously and somewhat that there were no announcement on liquidity.

The policy statement has caution all over, led by externalities. Also, MPC would wait for the new inflation and GDP series and give revised forecasts in April. Nevertheless, in the existing framework, they have revised their inflation estimates upward while firming up growth suggests that there is a long pause ahead. Growth is firm and inflation will return to 4-5% levels. But the read was the upside risks from externalities.

While RBI said that it would be pre-emptive on liquidity, no announcement of any structural measures is disappointing. While they acknowledge higher government securities yields not announcing measures or announcing measures "as and when needed" will only keep volatility active. In all, while the policy in terms of rates is batting for pause, no liquidity measures were announced in the policy and the RBI kept liquidity 'on tap' and proactive based on need.

(Krrity Ambey)

DIPTI DESHPANDE, PRINCIPAL ECONOMIST, CRISIL LTD.

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In line with expectations, the Monetary Policy Committee of the Reserve Bank of India kept policy rates unchanged, while maintaining the neutral stance, reflecting a wait-and-watch approach.

The MPC is factoring in a likely uptick in inflation in the first half of next fiscal, as growth remains strong. In addition, upcoming revisions to inflation and gross domestic product data--following changes in the methodology and base--call for prudence.

While the RBI governor did not explicitly announce fresh liquidity-easing measures, recent actions of Open Market Operations and forex swaps, suggest the RBI will stay proactive on liquidity. The objective is to keep lending rates easy.

Such actions have helped alleviate some pressure on systemic liquidity caused due to foreign capital outflows, the wider gap between bank credit and deposit growth, and the large government bond supply, which kept yields sticky. So far, the RBI's measures have helped in easing shorter-tenure interest rates.

The series of rate cuts by the MPC, combined with supportive fiscal measures, had lifted consumption demand.

Bank credit growth has risen to around 14%, the highest since September 2024. We believe the cumulative 125 basis points of repo rate reductions this fiscal should continue to support consumption into the first half of next fiscal.

The MPC will likely maintain pause next fiscal as the inflation trajectory ascends and growth remains healthy. The overhaul of the CPI and GDP series bears watching for changes in growth-inflation assessment. The RBI will keep the powder dry for unforeseen shocks.

For the current FY12 base year series, we expect inflation to tick up to 5% next fiscal from 2.5% this fiscal, driven by a statistical low-base effect for food prices, while GDP growth should moderate to 6.7% from 7.4% given prolonged global uncertainties.

The RBI's support to the bond market will be pivotal as government borrowing rises. The Centre has projected INR 17.2 trillion in borrowings next fiscal from INR 14.6 trillion this fiscal. State borrowings, which added pressure on G-sec yields this fiscal, need monitoring next fiscal as well.

(Priyasmita Dutta)

RAJANI SINHA, CHIEF ECONOMIST AT CAREEDGE RATINGS

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The Monetary Policy Committee's decision in its February meeting to maintain status quo on both the policy rate and stance was in line with our expectations. The committee revised up its average growth projection for Apr-Sept, FY27 by 20 basis points to 7%, while CPI inflation projections for FY26 and Apr-Sept, FY27 each were raised by 10 bps. Based on our estimates, the proposed tariff reduction could add around 20 bps to GDP growth, leading us to project growth of 7.2% for FY27. CPI inflation is expected to average close to 4% in FY27. However, the forthcoming new series for both CPI and GDP will need close monitoring, as these could lead to minor revisions to our projections.

On the liquidity front, the Governor reiterated the RBI's commitment to maintaining comfortable liquidity conditions through timely interventions as required. We expect the RBI to continue liquidity injection measures, particularly in the second half of March when tax-related outflows typically intensify. A comfortable liquidity condition is critical for transmission of the previous rate cuts. On the external front, easing trade policy uncertainties after the recent trade deals are likely to lend some support to the rupee. This may allow the RBI to scale back its forex market interventions, which had increased in the recent months amid elevated volatility. Reduced intervention would be supportive of rupee liquidity. Going ahead, we do not expect further rate cuts from the RBI unless downside tail risks to growth materialise.

(Priyasmita Dutta)

MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES

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The RBI's unanimous decision to pause in February, albeit with one dissent on the stance, stems from an improvement in external pressures since the Monetary Policy Committee's meeting in December, with domestic growth and inflation dynamics remaining comfortable. The MPC noted the improvement in system liquidity since December on the back of its durable liquidity infusion, of nearly INR 6.3 trillion, disappointing markets on any further infusion announcements.

We weren't surprised as we see system liquidity improving steadily by end-FY26 to ~1% of net demand and time liabilities, limiting the need for more RBI infusion via open market operations. Pain from persistently high government surplus, currency-in-circulation leakage, and forex intervention drain will reduce in the coming months.

The macro views of the RBI MPC are largely stable, with slight rise in Apr-Jun and Jul-Sept GDP growth forecasts to 6.9% and 7%, respectively, reflecting the better external environment. Inflation forecasts also saw a slight increase, largely due to base effects while momentum is expected to remain benign. There will be revisits on inflation and growth forecasts as the new series kicks in February.

While the MPC policy actions ahead may be sideways, implying limited chances of rate cuts (barring any external shocks), focus on monetary transmission will continue. Despite a fairly deep easing cycle, less than 10% of rate cut transmission is visible in bond yields in this cycle versus 88% in the 2019 cycle of 8 months and average of ~83% for the past four easing cycles.

The bear-flattened sovereign curve, widening corporate bond spreads, and rising money market and wholesale deposit rates underscore this friction.

We believe bond bearishness — driven by a mix of structural, cyclical, and one-off factors — is likely to persist through the rest of FY26, with the 10-year yield hovering in the 6.60–6.75% range.

FY27 may see the curve flattening, albeit with the balance of risks appearing skewed toward a bear flattening.

Even as some one-off factors reverse in FY27, the structural pain, unless addressed, will cast a shadow on bonds and imply a high-for-long state.

(Krity Ambey)

SHIVAAN TANDON, ASIA ECONOMIST, CAPITAL ECONOMICS

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The RBI kept the repo rate unchanged at 5.25% and sounded more confident on the growth outlook. With a key downside risk to growth having abated, thanks to the India-US trade deal, and inflation set to return to target in the coming quarters, we think there is little need for the central bank to resume its easing cycle.

The modest improvement in the growth outlook, driven by the sharp reduction in tariffs on imports from India to the US, is likely to have been the main reason the central bank opted against further easing. Indeed, the central bank revised up its growth forecast for the first two quarters of FY27 to 7% on average, from 6.8% previously.

RBI Governor Sanjay Malhotra noted that projections for subsequent quarters would be published after the upcoming rebasing of India's national accounts data, due in February. The upward revision is consistent with our view that the India-US trade deal is likely to boost growth by around 0.2–0.3 percentage points this year.

On inflation, Malhotra sounded a touch less dovish than at the previous meeting, and the central bank revised up its inflation forecast for the next two quarters, largely attributing the change to recent strength in precious metals prices. We think inflation is likely to return to the medium-term target of 4% by Oct-Dec as food prices normalise and base effects turn less favourable.

Overall, with the economic outlook having improved and inflation on its way back to target, the bar for resuming rate cuts is high. We think Friday's hold marks the end of the central bank's easing cycle.

(Shubham Rana)

GARIMA KAPOOR, DEPUTY HEAD OF RESEARCH AND ECONOMIST, ELARA CAPITAL

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Focusing on effective transmission of rate cuts already taken and being encouraged by healthy growth trajectory in the economy RBI's Monetary Policy Committee decided to keep repo rate unchanged while awaiting new GDP and CPI series.

With inflation expected to rise hereon amid normalisation of food prices and adverse base effect, the scope for further rate cuts has shrunk. A shock to growth-inflation balance would only propel another rate cut. For now, we expect a prolonged pause from the RBI. 

(Shubham Rana)

FUND MANAGERS

ABHISHEK BISEN, HEAD OF FIXED INCOME, KOTAK MAHINDRA AMC

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RBI policy has been in line with expectation. RBI unanimously decided to hold policy repo rate at 5.25% and stance as neutral. The inflation projection for H1FY27 has been revised slightly higher to 4.1% from 3.95% but inflation outlook has remained benign.

The growth projection for H1FY27 has been revised upwards to 6.95% from 6.75% earlier. The recent free trade agreement with EU and India-US trade deal has reduced risks to GDP growth.

RBI will continue to remain proactive and maintain ample liquidity. We believe post this policy, RBI will be in a long pause. The 10-year G-sec has moved up slightly by 4 bps and is trading around 6.70% levels.

(Arya S. Biju)

OTHERS

SACHIN BAJAJ, EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER, AXIS MAX LIFE INSURANCE

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The MPC meeting comes against a backdrop of heightened geopolitical uncertainty, inflation below the lower end of the MPC tolerance band, and volatile currency markets.

After cutting policy rates by 125 basis points over the past year, the Monetary Policy Committee today unanimously decided to keep all policy rates unchanged. While inflation remains below the RBI target of 4%, the Bank expects inflation for Q1 and Q2 2026 to reach 4% and 4.2%, respectively, with an upward revision mainly on account of rising precious metal prices. Additionally, the recently concluded India-EU trade deal and the potential India-US trade deal are expected to provide a boost to growth going forward.

The policy announced today was a status quo decision. However, we expect space for further monetary support if growth slows down. We anticipate a final 25-basis-point cut in the repo rate to 5% during the early part of the next financial year to address growth concerns emanating from the uncertain global environment.

(Simran Rede)

 End

Compiled by Madhuri Pawar and Mansi Patil

Filed by Tanima Banerjee

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