RBI likely to keep rates unchanged at upcoming policy meet: Report

The Reserve Bank of India (RBI) is expected to keep its key policy rates unchanged at its upcoming monetary policy review meeting scheduled from February 4 to 6, 2026, ANI, citing a Crisil report.

The decision is likely to come as inflation has shown a mild rise in recent months, prompting the central bank to stay cautious.

In its December meeting, the Monetary Policy Committee (MPC) had cut the repo rate by 25 basis points to 5.25 per cent. At the same time, it kept its policy stance neutral, signalling that future moves will depend on incoming economic data.

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Why is RBI expected to pause on interest rates?

Crisil believes the RBI will “stay put” on interest rates due to a gradual rise in inflation. India’s retail inflation increased from 0.71 per cent in November to 1.33 per cent in December. Although inflation remains below the RBI’s target range of 2–4 per cent, the upward movement has led to caution.

According to Crisil, this rise in inflation reduces the need for further rate cuts in the near term. The RBI is expected to closely watch inflation trends before making any fresh policy moves.

What is RBI’s view on growth and inflation?

RBI Governor Sanjay Malhotra, speaking in December, described India’s current economic situation as a “rare goldilocks period.” He pointed to strong economic growth combined with very low inflation as a positive sign for the economy, ANI reported.

India reported strong growth in the July–September quarter, following which the RBI raised its GDP growth forecast for the full year to 7.3 per cent. This was an increase of half a percentage point from its earlier estimate.

The National Statistics Office (NSO), in its first advance estimates, pegged India’s real GDP growth at 7.4 per cent for the current fiscal year 2025–26, compared with 6.5 per cent in the previous fiscal.

How fast will India’s economy grow next year?

While growth remains strong this year, Crisil expects India’s GDP growth to slow down slightly in the next fiscal year. It projects growth at 6.7 per cent in the coming fiscal, compared with the current year’s estimate of 7.4 per cent.

Crisil said that a challenging global trade environment, reduced domestic fiscal support, and fading benefits from a low base and low inflation deflator are likely to weigh on growth next year. However, it added that nominal growth could be higher due to rising inflation.

Will inflation rise in the next fiscal year?

According to the Crisil report, India’s retail inflation is expected to rise to 5.0 per cent in fiscal year 2026–27, up from an estimated 2.5 per cent in the current fiscal. The rise is expected mainly due to a statistical effect, as food inflation has been very low this year.

Despite this increase, Crisil believes inflation will remain within the RBI’s comfort range. Softer global commodity prices and the continued impact of Goods and Services Tax (GST) rationalisation are expected to help keep prices in check.

What is the outlook for crude oil prices?

Crisil also shared its take on crude oil prices due to their impact on the Indian economic outlook, including inflation and growth. It expects crude oil prices to remain soft this fiscal year, averaging between USD 62 and USD 67 per barrel.

For calendar year 2026, crude oil prices are expected to average USD 60–65 per barrel. Brent crude averaged USD 62.7 per barrel in December, down 1.4 per cent from November and 15.1 per cent lower than a year ago. At the time of filing the report, crude oil was trading near USD 59 per barrel.

Overall, Crisil’s outlook suggests a steady policy approach from the RBI amid rising inflation and moderating growth.

With inputs from agencies.