RBI MPC Meeting: Loan Rates Unchanged as Repo Rate Holds at 5.25%

New Delhi: The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25%, according to RBI Governor Sanjay Malhotra after the Monetary Policy Committee (MPC) meeting on Friday. This marks the first MPC meeting following the recent Union Budget, drawing close attention from markets, borrowers, and investors keen to gauge the central bank’s stance on interest rates and economic growth. With the repo rate unchanged, borrowing costs for businesses and consumers will remain steady.

The three-day MPC review began on February 4 under the chairmanship of Governor Malhotra. Most economists and financial analysts had anticipated that the repo rate would remain on hold. The last rate change occurred in December 2025, when the MPC cut the repo rate by 25 basis points to 5.25%, signaling a push to support economic growth. Post-meeting, Governor Malhotra noted that external challenges have increased since the previous policy review, but recent successful trade agreements provide a positive signal for the economy. Overall, the RBI maintains a favorable outlook for domestic inflation and growth in the near term.

Alongside the repo rate, the Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) and bank rate continue at 5.5%.

Cumulative Rate Cuts Over the Past Year
Over the last 12 months, the RBI has slashed the repo rate by a total of 125 basis points. Many experts believe the central bank will now adopt a “wait-and-watch” approach, maintaining the repo rate at 5.25% and evaluating the impact of previous cuts before making further adjustments. Reports from major banks indicate that global uncertainties, foreign exchange volatility, and stable government bond yields have prompted the RBI to exercise caution in altering its key policy rate.

Why This Meeting Was Crucial
The February MPC meeting came at a time of significant economic developments, including the presentation of the Union Budget 2026 and a major India-US trade agreement. Both these events have implications for economic growth and inflation. Observers focused not just on the repo rate decision but also on how the RBI plans to manage liquidity in the market and balance inflation with growth.

Understanding the Repo Rate
The repo rate is the interest rate at which RBI lends to commercial banks and is a key tool of monetary policy. Lower repo rates generally make borrowing cheaper for companies and consumers. By keeping the rate unchanged, the MPC signals satisfaction with the current inflation and growth trajectory, preferring to observe the effects of earlier cuts before taking further action.

Impact on Banks and Borrowers
Previous rate cuts have gradually lowered policy rates, but banks have passed on these reductions slowly to borrowers. NuVama Research notes that the impact of rate cuts is visible in lending rates, while government bond yields have remained stable. The RBI continues to describe the economy as being in a “Goldilocks phase”—neither too hot nor too cold, but just right.