RBI's Upcoming Monetary Policy Meeting: What to Expect

As the Reserve Bank of India prepares for its Monetary Policy Committee meeting, experts anticipate a pause in rate cuts amid rising inflation concerns. With the repo rate currently at 5.25%, the RBI is expected to focus on liquidity measures rather than further policy adjustments. Analysts suggest that maintaining a neutral stance will allow the central bank to respond effectively to any economic challenges ahead. This article delves into the implications of the RBI's decisions and the broader economic context, including the recent trade deal with the US and the upcoming budget announcements.

By Narendra Chaudhary Feb 4, 2026, 12:55 IST

Overview of the RBI Monetary Policy Committee Meeting

New Delhi, Feb 4: Following the Union Budget 2026 and the landmark trade agreement between India and the US, attention now shifts to the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting, which is set to commence on Wednesday and will conclude with a key repo rate decision on Friday.

Experts predict that the MPC, led by RBI Governor Sanjay Malhotra, is unlikely to implement any further cuts to the policy rate. Instead, the Central Bank is expected to focus on direct interventions to address issues related to liquidity, bond stability, and currency risks.

Since February 2025, the RBI has already reduced the repo rate by 125 basis points, bringing it down to 5.25 percent.

Analysts suggest that with inflation projected to rise, particularly with the new base year series set to be released on February 12, there is minimal justification for additional rate cuts.

According to a report from Yes Bank, with the current repo rate at 5.25 percent and inflation expected to hover around 4 percent, the real rate of 125 basis points appears to be appropriate.

The RBI is advised to maintain a neutral stance and hold off on further cuts to preserve its capacity to respond to any potential economic downturn.

Radhika Rao, Executive Director and Senior Economist at DBS Bank, noted that bond purchases are likely to persist through this quarter and into April-June 2026. Given the record-high borrowings outlined in the FY27 Budget, the central bank may opt for a flexible approach in its money market operations to manage borrowing costs effectively.

Recently, the RBI unveiled a set of liquidity-boosting measures aimed at injecting over Rs 2 lakh crore into the banking sector to alleviate liquidity constraints. The Central Bank plans to utilize a mix of open market bond purchases, foreign exchange swaps, and variable rate repo operations to improve liquidity conditions in the financial system, following a thorough assessment of current financial and liquidity situations.