RBI Holds Policy Rate at 5.25% in February 2026 Meet as Growth Remains Resilient

The Reserve Bank of India (RBI) held its Monetary Policy Committee (MPC) meeting from February 4 to 6, 2026. After acknowledging fresh growth and inflation signals, the MPC kept the repo rate unchanged at 5.25%. Which means the RBI is pausing after the December 2025 cut. Inflation still looks comfortable, but global risks are rising. So the RBI is choosing stability while keeping support for growth in place.

Read on to understand the key updates and what they mean for you.

Policy Rate Decision and Rationale

The repo rate is the rate at which the RBI lends to banks. When it stays the same, banks’ overall borrowing cost does not change right away. That usually means loan rates and EMI changes, if any, are gradual and depend on what lenders do next.

Here are the key policy rates after the February 2026 decision:

• Repo rate: 5.25%
• SDF (Standing Deposit Facility): 5.00%
• MSF (Marginal Standing Facility) and Bank Rate: 5.50%

The MPC kept a neutral stance. This signals a balanced approach, where the next move will depend on incoming data, especially inflation trends, growth momentum and global conditions.

Inflation Trends and Forecast

Inflation remained below the tolerance band in November and December. The RBI said the near-term inflation outlook is still comfortable and close to the target. It also noted a small upward adjustment in its projections, driven mainly by higher precious metal prices. This has added around 60 to 70 basis points, but overall inflation pressures continue to remain low.

Here is the updated CPI inflation outlook shared in the February 2026 statement:

• 2025 to 26 average: 2.1%
• Q4 2025 to 26: 3.2%
• Q1 2026 to 27: 4.0%
• Q2 2026 to 27: 4.2%

The RBI also said food supply remains comfortable, supported by healthy buffer stocks, good reservoir levels and steady Rabi sowing. At the same time, it will keep a close watch on energy prices and weather-related risks.

Growth Outlook Remains Resilient

The RBI sounded confident about growth in its February 2026 statement. It said economic activity remains resilient, even as global conditions turn more challenging. Growth in 2025-26 is expected to be stronger than last year, led mainly by domestic demand. Private consumption and investment are doing the heavy lifting, while exports remain under pressure as imports continue to grow faster.

Key growth takeaways the RBI highlighted include:

• FY 2025 to 26 real GDP growth: 7.4%
• FY 2025 to 26 real GVA growth: 7.3%
• Q1 2026 to 27 growth projection: 6.9%
• Q2 2026 to 27 growth projection: 7.0%

The RBI also said it will share full-year 2026-27 projections in the April policy, since the new GDP series will be released later in February.

Global And External Factors To Watch

The RBI highlighted that global risks have picked up. While growth overseas may improve slightly due to easier financial conditions and tech investment, uncertainty remains high.

Key global risks and trends the RBI flagged:

• Rising geopolitical and trade tariff tensions
• Uneven inflation across major economies
• Volatile equity markets and cautious bond markets
• Shifts in global trade patterns and capital flows

On the domestic front, the RBI noted that services exports and remittances continue to support India’s external position. However, the trade deficit has widened as imports grow faster than exports. India’s foreign exchange reserves remain at comfortable levels, providing a buffer against global shocks.

Additional Measures Announced In February 2026

Along with the rate decision, the RBI announced several steps aimed at protecting customers, improving credit flow and easing regulatory processes. Top measures include:

• Customer protection: Draft rules will be issued to curb mis-selling, regulate recovery practices and limit customer liability in unauthorised digital transactions.
• Small fraud relief: The RBI proposed a framework to compensate customers up to ₹25,000 for losses in small-value fraud cases.
• Digital payment safety: A discussion paper is planned to strengthen payment security, including ideas like delayed credits and extra authentication for certain users, such as senior citizens.
• MSME credit boost: The collateral-free loan limit for MSMEs is proposed to be increased from ₹10 lakh to ₹20 lakh, making access to credit easier.
• NBFC ease: Smaller NBFCs with no public funds or customer interface and assets up to ₹1,000 crores may get relief from registration and branch approval requirements.
• Market deepening: The RBI plans to remove the overall cap under the Voluntary Retention Route and introduce new instruments like corporate bond derivatives to deepen financial markets.

What This Means For Borrowers

Since the repo rate is unchanged, there may not be any immediate EMI change. Any benefit usually depends on how quickly your lender passes on changes and how your loan is linked.

Here is what you can take away as a borrower:

• Existing EMIs: Likely to remain stable in the near term, unless your lender revises rates for other reasons
• New loans: Pricing may stay similar, with lenders focusing more on your profile, credit score and income stability
• Deposits: Deposit rates may also stay steady, since the policy rate has not moved
• Credit availability: The RBI’s stance on liquidity and the MSME collateral-free limit can support credit flow over time

Key Takeaways From The February 2026 MPC

• Repo rate unchanged: The policy rate stays at 5.25%. The RBI has retained a neutral stance. Future moves will depend on incoming data.
• Inflation remains comfortable: CPI inflation is projected at 2.1% for 2025 to 26. Inflation for Q1 and Q2 of 2026 to 27 is expected to stay close to 4%.
• Growth outlook stays positive: The RBI expects the economy to grow by 7.4% in 2025 to 26. Growth in early 2026 to 27 is projected at 6.9% in Q1 and 7.0% in Q2.
• Liquidity support continues: The RBI signalled that it will actively manage liquidity to ensure smooth rate transmission and adequate credit flow.
• Stronger customer protection: Draft rules are planned on mis-selling, loan recovery practices and fraud liability. A ₹25,000 compensation framework for small fraud cases is also proposed.

Credit and inclusion push: The RBI announced steps to expand collateral-free MSME lending, review inclusion schemes and deepen financial markets.