Time to pause? RBI may keep rates unchanged at MPC meet

MUMBAI: The RBI is expected to keep interest rates unchanged after the conclusion of the Monetary Policy Committee (MPC) meeting on Feb 6, with economists flagging a pause amid rising inflation, slowing growth, and impending data revisions.

“We expect the RBI to pause in the upcoming 6th Feb meeting, maintaining the repo rate at 5.25%,” said Kaushik Das, an economist with Deutsche Bank. He said the monetary policy stance was likely to remain neutral, with communication broadly balanced. He added that liquidity would be the main focus, given RBI’s recent bond purchases through open market operations and forex swap auctions announced since the Dec policy.

The RBI cut rates in Dec after the MPC placed greater weight on inflation slipping below the lower bound of the flexible inflation targeting framework. With inflation now expected to move higher, including under the new base-year series to be released from Feb 12, economists see limited scope for further easing.

Growth is also expected to slow and settle in the 6.7-7% range in FY27, close to the Economic Survey’s estimate of potential growth at 7%. With the repo rate at 5.25% and inflation projected at around 4%, the real rate of about 125 basis points appears reasonable, said Indranil Pan, an economist with Yes Bank, in a report. He said the RBI should remain on pause, retain a neutral stance, and preserve policy space in case of a growth slump, which he said was not the base case.

Inflation has ticked up after hitting multi-year lows, rising to 0.71% in Nov 2025 from 0.25% in Oct, driven by persistent food prices and weaker core inflation trends.