Monetary Policy Committee Backs Pause Amid Stable Inflation Outlook

The Reserve Bank of India maintained its current repo rate of 5.25% after the RBI monetary policy outcome results delivered a status quo. The six-member Monetary Policy Committee met from February 4 to 6 and voted unanimously to retain the rate, with the central bank maintaining a neutral stance. 

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Governor Sanjay Malhotra confirmed the decision in a televised address, citing stable inflation conditions.

Economists Back Pause as Growth Holds Firm

According to a survey of 39 economists showed most expected no change in rates. India’s GDP growth is projected above 7% for a second straight year in FY27, while the rupee recently posted its biggest rally in seven years. Market participants say the combination of resilient growth and benign inflation has reduced pressure on the central bank to extend the rate-cut cycle further.

Policy Signals and Revised Projections

The RBI raised the GDP growth outlook for Q1 FY27 to 6.9% from 6.7% and trimmed the inflation forecast to 3.9% from 4.0%. New CPI and GDP series are due later this month, prompting caution on forward guidance. “The governor refrained from giving FY27 forecasts… since revision of the base rates in both are due shortly,” said V.K. Vijayakumar of Geojit Investments.

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Banking Sector Implications Emerge

Governor Malhotra observed that bank credit growth has increased during the last few months, which analysts interpret as a positive factor for banking companies' profitability. Vijayakumar stated that the positive credit developments will enhance banking stocks as increased loan demand drives revenue growth for banks. 

The RBI has reduced interest rates by 125 basis points since February 2025, marking its most extensive rate reduction since 2019, and includes a 25-basis-point decrease that occurred in December.

Conclusion: Pause Reflects Policy Balance

Compared with earlier easing phases, the current pause reflects a shift toward stability as inflation remains within comfort levels. The Reserve Bank of India maintains economic growth while protecting financial stability through its current approach, according to analysts. 

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The current market situation depends on the stance as investors determine if the rate-cutting period has reached its highest point. The upcoming decisions will depend on three main factors, which include future inflation patterns, economic growth strength, and international situations.