Policy rate may not change soon: RBI

Mumbai: Minutes of the Feb 4-6 meeting of Reserve Bank of India's Monetary Policy Committee (MPC) indicate the panel kept policy repo rate unchanged because growth is strengthening and inflation is benign, signalling a pause in easing with scope for future cuts if data permits.

Comments of the rate-setting panel show broad agreement that the current policy rate is appropriately calibrated for an economy combining buoyant growth with benign inflation, even as several members flagged policy space to support activity if incoming data allow. Governor Sanjay Malhotra said that "given the present state of the economy and its outlook-buoyant growth and benign inflation-I feel the current policy rate is appropriate," and added that "growth prospects are looking up while inflation outlook remains broadly unchanged."

On inflation, the minutes convey strong consensus that price pressures are contained and unlikely to constrain policy in the near term. Malhotra said "inflation...is expected to remain benign," and that "excluding precious metals, inflation outlook is even lower... the underlying inflation continues to be low."

Deputy governor Poonam Gupta said "low inflation continues to be a boon," that "risk to inflation from external sources... is perceived to be limited," and that "there does not seem to be a risk of buoyant economic activity resulting in higher inflation." Executive director Indranil Bhattacharyya said the "benign inflation scenario is likely to persist for long" and that inflation, excluding precious metals, "will continue to remain benign for the foreseeable future."

Economist member Nagesh Kumar said the inflation outlook is "not showing any concerns of overheating," while economist member Ram Singh said "there are no signs of overheating in the economy" and that "underlying inflation pressures are expected to remain muted."

Growth assessments in the minutes point to improving momentum supported by domestic demand and recent trade agreements. Malhotra said "the outlook for the ensuing year is also expected to be strong," that "domestic drivers of growth continue to be robust," and that projections for real GDP growth in the first half of 2026-27 have been increased.

Kumar said "India's economic outlook has brightened considerably" and that recent developments "have lifted India's economic outlook significantly." Bhattacharyya said trade deals have "considerably improved the external outlook," with growth projections for the first two quarters of 2026-27 revised to 6.9% and 7%. Gupta said the "domestic growth-inflation mix continues to remain favorable."