Finance | RBI Holds Repo Rate at 6.5% Amidst Inflation Concerns

RBI Maintains Key Rate as Inflation Outlook Persists

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the benchmark repo rate unchanged at 6.5% on February 9, 2026, maintaining its stance to address ongoing inflation concerns, according to its unanimous decision.

What Happened: Repo Rate Unchanged for Seventh Time

During its latest meeting, the Monetary Policy Committee (MPC) of the Reserve Bank of India unanimously voted to hold the key lending rate, known as the repo rate (the rate at which commercial banks borrow money from the RBI), steady at 6.50%. This marks the seventh consecutive instance that the benchmark rate has remained unchanged, providing a degree of stability for lending and borrowing costs across the Indian economy, according to the official monetary policy statement.

Official Position: 'Withdrawal of Accommodation' Stance Maintained

The MPC also decided to maintain its 'withdrawal of accommodation' stance, indicating that the central bank remains prepared to take further measures if required to tame inflation. This cautious approach is underscored by the RBI's revised consumer price index (CPI) inflation forecast for Fiscal Year 2027 (FY27), which was adjusted slightly upwards to 5.2% from an earlier projection of 5.0%. RBI officials cited persistent food price pressures and global commodity price volatility as key drivers for this revision, as per the latest monetary policy statement.

Despite these inflation concerns, RBI Governor Shaktikanta Das expressed confidence in India's economic resilience. Following the MPC meeting, Governor Das reiterated a robust GDP growth projection of 7.0% for FY27, acknowledging external challenges such as geopolitical tensions and slowing global trade, according to his remarks.

Timeline: Sustained Focus on Price Stability

The decision to keep the repo rate unchanged for the seventh consecutive time underscores the RBI's sustained focus on anchoring inflation expectations while supporting growth. The 'withdrawal of accommodation' stance suggests that the central bank is not yet ready to ease monetary policy, indicating that any potential rate cuts may be further off until inflation consistently aligns with the MPC's target. The trajectory of food prices and global commodity movements will be crucial factors influencing future policy decisions.

Context: Understanding Monetary Policy Tools

The repo rate is a critical tool for the RBI to manage liquidity and control inflation in the economy. A higher repo rate makes borrowing more expensive for banks, which in turn can lead to higher lending rates for consumers and businesses, thereby curbing demand and inflationary pressures. Conversely, a lower repo rate can stimulate economic activity. The 'withdrawal of accommodation' stance implies reducing the amount of money in the financial system to ensure inflation aligns with the target, without necessarily being contractionary.

Key Takeaways

• The RBI's MPC kept the benchmark repo rate unchanged at 6.50% for the seventh consecutive time.
• The central bank maintained its 'withdrawal of accommodation' stance due to persistent inflation concerns.
• The RBI slightly revised its FY27 inflation projection upwards to 5.2% (from 5.0%).
• Governor Shaktikanta Das projected a robust GDP growth of 7.0% for FY27, highlighting India's economic resilience.

People Also Ask

1. What is the current repo rate in India?
   The Reserve Bank of India's Monetary Policy Committee unanimously decided to keep the benchmark repo rate unchanged at 6.50% during its meeting on February 9, 2026. This marks the seventh consecutive time the rate has been maintained.
2. Why did the RBI keep the repo rate unchanged?
   The RBI kept the repo rate unchanged primarily due to ongoing inflation concerns, particularly citing persistent food price pressures and global commodity price volatility. This aligns with its 'withdrawal of accommodation' stance to ensure price stability.
3. What is the 'withdrawal of accommodation' stance?
   The 'withdrawal of accommodation' stance by the RBI signifies that the central bank is focused on ensuring inflation aligns with its target. It means reducing the surplus liquidity in the financial system to curb price pressures without necessarily shrinking the money supply aggressively.
4. What are the RBI's economic projections for FY27?
   The RBI has slightly revised its consumer price index (CPI) inflation forecast for Fiscal Year 2027 (FY27) to 5.2% from an earlier 5.0%. Concurrently, RBI Governor Shaktikanta Das projected a robust GDP growth of 7.0% for FY27, amidst global headwinds.