Published: 3 February 2026Business StandardEconomy
RBI MPC Meeting Begins: Markets Expect Rate Hold After 125 bps Cumulative Cuts in FY25-26
AQuick answer
RBI MPC begins Feb 4-6 meeting; repo rate at 5.25% expected to hold; CPI at record low 1.33%.
Key facts
RBI MPC began its three-day meeting on February 4, 2026, with the policy decision expected on February 6.
Markets widely expected MPC to keep the repo rate unchanged at 5.25% after 125 basis points of cumulative rate cuts over FY25-26.
CPI inflation at historically low 1.33% in December 2025, well below the 2-6% target band.
The India-US trade deal reduced external uncertainty and stabilized the rupee.
The growth-focused Union Budget 2026-27 supported the case for a rate hold.
The Reserve Bank of India's Monetary Policy Committee began its three-day meeting on February 4, 2026, with the policy decision expected on February 6. Markets widely expected the MPC to keep the repo rate unchanged at 5.25%, following cumulative rate cuts of 125 basis points over FY25-26 (the last cut being 25 bps in December 2025).
The key factors supporting a hold include: CPI inflation at historically low 1.33% in December 2025 (well below the 2-6% target band), the growth-focused Union Budget 2026-27, and reduced external uncertainty from the India-US trade deal. Business Standard noted that the US trade deal further reduced the pressure for any rate action, as the rupee stabilized following the tariff reduction announcement.
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Mains angle
Q: Analyse the monetary policy stance expected from the RBI's February 2026 MPC meeting in light of inflation, growth and external conditions.
Answer (50 words):
The RBI Monetary Policy Committee began its 4-6 February 2026 meeting with markets expecting the repo rate held at 5.25 percent after cumulative 125 basis-point cuts over FY25-26; record-low December CPI inflation of 1.33 percent, the growth-oriented Union Budget 2026-27 and the India-US trade deal supported a pause decision.
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What repo rate did RBI MPC maintain going into the February 2026 meeting?
The **RBI MPC (Monetary Policy Committee)** was widely expected to keep the **repo rate unchanged at 5.25%** in its February 2026 meeting. This follows **cumulative rate cuts of 125 basis points over FY25-26**, with the last cut of **25 bps in December 2025**.
When did the RBI MPC hold its meeting in February 2026 and when was the decision expected?
The **RBI MPC three-day meeting began on February 4, 2026**, with the **policy decision expected on February 6, 2026**. Governor Sanjay Malhotra chaired the committee, which reviews inflation, growth, and external conditions before deciding on the repo rate.
What was India's CPI inflation rate in December 2025 and why is it significant for RBI policy?
India's **CPI inflation was at a historically low 1.33% in December 2025**, well below the **RBI's 2-6% target band**. This very low inflation supported the case for a rate hold as further rate cuts were not urgently needed, and the focus shifted to supporting growth.
How did the India-US trade deal affect expectations for RBI monetary policy in February 2026?
The **India-US trade deal reduced external uncertainty** and helped **stabilize the rupee** following the tariff reduction announcement. Business Standard noted this further reduced pressure for any emergency rate action by the RBI MPC in its February 2026 meeting.
What is the significance of 125 basis points cumulative RBI rate cuts in FY25-26?
**125 basis points (1.25%) of cumulative rate cuts in FY25-26** represents a significant monetary easing cycle by the **RBI**. This reduction lowered borrowing costs for businesses and consumers, aimed at stimulating investment and consumption to support India's economic growth.
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