The three-day Monetary Policy Committee (MPC) meeting of the reserve bank of india (RBI) begins today.

RBI governor Sanjay Malhotra will announce the policy decision on Friday, with markets closely tracking signals on future rate action.

The meeting comes amid easing inflation and steady economic growth, sharpening debate over a possible further repo rate cut.

Monetary Easing So Far: Current Policy Stance

Since february last year, the RBI has cut the repo rate by a cumulative 125 basis points.

At the december 3–5MPC meeting, the RBI delivered a 25-basis-point cut, taking the repo rate to 5.25%.

The easing cycle reflected a shift toward supporting growth while keeping inflation within comfort levels.

With substantial easing already in place, the MPC now data-faces the question of whether to cut further or pause.

Growth Outlook: Momentum Remains Strong

The RBI has projected GDP growth of 7.3% for FY 2025–26, revised upward by nearly 50 basis points.

The upgrade reflects:

Improved domestic demand

Strong consumption trends

Robust credit growth

Stable financial conditions

Solid growth gives policymakers confidence, but also reduces urgency for aggressive easing.

Inflation Trends: Comfort, But Vigilance Needed

CPI inflation stood at 1.33% in december 2025, well below the RBI’s 4% target.

Inflation has remained below target for 11 consecutive months.

Month-on-month inflation rose due to:

Higher food prices (vegetables, pulses, meat, eggs)

Personal care and household categories

While inflation is benign, food price pressures warrant close monitoring.

What Markets Are Watching Closely

The policy tone and forward guidance may matter more than the headline rate decision.

Key focus areas for investors:

RBI’s confidence in inflation durability

Assessment of rate-cut transmission

Signals on future easing versus a pause

Bond yields, equities, and the rupee will react to both action and messaging.

Policy Balance: Cut or Pause

Low inflation offers room to ease further.

Strong growth argues for caution.

The february decision will shape borrowing costs, investment sentiment, and the near-term economic narrative.

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