RBI keeps repo rate unchanged at 5.25%
What's the story
The Reserve Bank of India (RBI) has decided to keep the policy repo rate unchanged at 5.25%. The decision was announced by RBI Governor Sanjay Malhotra on Friday. He said that the Monetary Policy Committee (MPC) arrived at this conclusion after a detailed assessment of evolving macroeconomic conditions and the overall economic outlook.
Global factors
Near-term domestic inflation, growth outlook remain positive: Malhotra
Malhotra noted that external headwinds have intensified since the last policy meeting. However, he also highlighted that the successful completion of recent trade deals bodes well for the economic outlook. He said, "Overall, the near-term domestic inflation and growth outlook remain positive." The unchanged repo rate means the Standing Deposit Facility (SDF) rate stays at 5%, while Marginal Standing Facility (MSF) rate and Bank Rate remain at 5.5%.
Policy balance
MPC's decision reflects careful balancing of domestic economic conditions
The MPC's decision reflects a careful balancing of domestic economic conditions against global uncertainties. While growth and inflation trends at home remain supportive, the committee has remained cautious in view of global developments and shifting monetary policy signals from major economies. In February 2026, major central banks' monetary policy decisions showed clear divergence. The US Federal Reserve and Bank of England kept interest rates unchanged after a series of rate cuts in 2025.
Inflation focus
RBI to remain guided by incoming data, macroeconomic outlook
On the inflation front, the Ministry of Statistics and Programme Implementation's latest data showed year-on-year (YoY) inflation based on Consumer Price Index (CPI) at 1.33% in December 2025 on a provisional basis. The low inflation reading has provided comfort to policymakers, even as they remain watchful of potential risks arising from global developments. The RBI reiterated that future policy actions will continue to be guided by incoming data and the evolving macroeconomic outlook, with a focus on maintaining price stability.