New Delhi is bracing for a pivotal announcement from the Reserve Bank of India’s Monetary Policy Committee today. After implementing an interest rate cut in December 2025, market watchers anticipate the central bank will hold rates steady this February. The real spotlight, however, falls on the forward guidance and overall policy tone that could shape India’s economic trajectory.
The three-day MPC meeting kicked off on Wednesday, drawing intense scrutiny from economists and investors alike. Radhika Rao, Executive Director and Senior Economist at DBS Bank, points to robust economic growth and recent US trade pacts as key factors. These developments have eased global risks, potentially paving the way for a more flexible monetary approach in the months ahead.
Despite softening inflation and persistent pressure on the rupee, Rao cautions against hasty rate reductions. Challenges in mobilizing deposits and risks of portfolio outflows loom large. ‘The RBI might prioritize liquidity management, bond market stability, and currency interventions over aggressive easing,’ she noted.
Expectations center on continued government bond purchases through this quarter and into April-June 2026. Even as policy rates remain accommodative, bond yields have surged recently, reinforcing the case for status quo. SBI Research echoes this view, highlighting that the choice of eligible securities in Open Market Operations (OMO) will be crucial for liquidity injection effectiveness.
A game-changer since the last policy is the landmark trade agreement with the US and European Union, slashing import duties on Indian goods from 50% to 18%. This positions India among Asia’s lowest-tariff destinations, boosting export competitiveness and promising stronger outward shipments. As the RBI unveils its decision, these elements will undoubtedly influence its strategic outlook.