Informist Poll
MPC to hold rates in 2026, next move may be a hike in FY28
This story was originally published at 15:43 IST on 11 February 2026
Register to read our real-time news.Informist, Wednesday, Feb. 11, 2026
By Shubham Rana
MUMBAI – The Reserve Bank of India's Monetary Policy Committee is expected to leave interest rates unchanged throughout 2026, with inflation set to rise and growth projected to stay robust this year, according to a poll by Informist. The rate-setting panel may tinker with the repo rate only in 2027-28 (Apr-Mar), when some economists expect it to raise the key policy rate.
The committee lowered the repo rate by 125 basis points in 2025, the most in a calendar year since 2019, to 5.25% as inflation fell below the RBI's medium-term target of 4% while growth exceeded expectations. The six-member committee left the repo rate unchanged at 5.25% last week and maintained the neutral stance even as external member Ram Singh was of the view that the stance be changed to accommodative from neutral.
Further interest rate cuts are unlikely unless growth slows down drastically, economists said. All but two of the 18 economists polled by Informist see the committee keeping the repo rate at 5.25% till the end of this calendar year. Only Nomura and Nirmal Bang Equities Pvt. Ltd. see the possibility of a 25-bps rate cut in April.
"While we do not rule out the possibility of a 25-bps rate cut in April, the room for further easing is narrowing amid resilient growth, the US–India trade agreement, and expectations of a gradual pickup in inflation," economists at Nirmal Bang said.
RBI Governor Sanjay Malhotra Friday said the neutral stance of the Monetary Policy Committee shows that interest rates will stay at the current levels over the next nine to 12 months. Interest rates are seen at "low levels" for a long time and the committee will take decisions on further interest rates from "policy to policy", he said.
"There is unlikely to be any further rate cuts going ahead. We expect the RBI to hold rates in FY27," Sakshi Gupta, principal economist at HDFC Bank, said. "Any turn in the cycle, a rate hike, is likely not before middle of FY28 and would hinge on how global commodity prices move, impact of 8th Pay Commission, and interplay of weather-related uncertainties. The predicted turn in the cycle is based only on the typical interest rate cycle durations," Gupta said.
According to economists at Nomura, there are two key uncertainties for the interest rate trajectory--the new CPI and GDP series due later this month and the India-US trade deal. The new CPI and GDP series may not only impact the headline numbers, but will also update the understanding of the underlying drivers of inflation and growth, Nomura said in a report. "Second, much of the optimism on the US-India trade deal – and its spillover onto growth, foreign investment and monetary policy – will depend on the details of what has been agreed upon."
The RBI last week raised its CPI inflation forecast for the March quarter by 30 bps to 3.2?cause of an unfavourable base effect. It also raised the inflation forecast for financial year 2025-26 (Apr-Mar) to 2.1% from 2.0%. Excluding precious metals, the underlying inflation pressures remain muted, Malhotra said. The RBI deferred giving projections for inflation for FY27 till April in view of the impending new CPI series.
The central bank raised its GDP growth projection for the June quarter to 6.9% from 6.7%, and for the September quarter to 7% from 6.8%. The RBI also deferred its growth estimate for FY27 to April, after the revised GDP series is released on Feb. 27.
Beyond 2026, the interest rate outlook remains difficult to project, though some economists said the Monetary Policy Committee may have to raise rates in FY28.
"We expect a prolonged pause on repo rate, at least till mid-2027," Kanika Pasricha, chief economic adviser at Union Bank of India, said. "Interest rate cycles have become shorter but they are not so short that we will see a turn from cuts to hikes within a year."
Following are the expectations of economists on future repo rate trajectory:
|
ORGANISATION |
REPO RATE EXPECTATION AT 2026 END |
NEXT RATE MOVE EXPECTATION |
|
ANZ Banking Group |
5.25% |
-- |
|
Bank of Baroda |
5.25% |
-- |
|
Barclays |
5.25% |
-- |
|
Capital Economics |
5.25% |
Hike to 5.75% in 2027 |
|
Crisil |
5.25% |
--- |
|
DBS Bank |
5.25% |
-- |
|
HDFC Bank |
5.25% |
Hike in second half of FY28 |
|
Goldman Sachs |
5.25% |
-- |
|
HSBC |
5.25% |
-- |
|
ICICI Securities Primary Dealership |
5.25% |
-- |
|
IDFC FIRST Bank |
5.25% |
Hike in FY28 |
|
India Ratings and Research |
5.25% |
-- |
|
Kotak Mahindra Bank |
5.25% |
-- |
|
Morgan Stanley |
5.25% |
-- |
|
Nirmal Bang Equities |
5.00% |
25 bps cut in April |
|
Nomura |
5.00% |
25 bps cut in April |
|
Union Bank of India |
5.25% |
-- |
|
YES Bank |
5.25% |
-- |
End
With inputs from Pratiksha
Edited by Avishek Dutta
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