RBI Concludes Its Final MPC of FY26: A Pause That Signals Comfort, Not Complacency

The Reserve Bank of India concluded its final Monetary Policy Committee (MPC) meeting of FY26 on February 6, 2026, choosing to keep policy rates unchanged and maintain a neutral stance. The decision marked a deliberate pause after a meaningful easing cycle during FY26, signalling that the central bank is now comfortable with the growth, inflation balance, even as it remains alert to global uncertainties. This meeting effectively draws the curtain on FY26’s monetary policy journey, one that transitioned from inflation control to growth support without sacrificing credibility.

MPC Decision: Rates on Hold, Stance Remains Neutral

The six-member MPC unanimously voted to keep the repo rate unchanged at 5.25 per cent, in line with market expectations.

Policy Rates Snapshot

By holding rates steady, the RBI signalled that front loaded easing has already done its job and incremental decisions will now depend on incoming data rather than policy urgency.

FY26 in Review: A Clear Rate-Cut Cycle, Then a Pause

FY26 saw a decisive but calibrated easing cycle as inflation softened and growth risks tilted to the downside early in the year.

Repo Rate Trajectory in FY26

Total easing in FY26 is 100 basis points. The message is clear: policy support has been delivered and RBI is now shifting to a wait-and-watch mode.

Growth Outlook: India Continues to Outperform

The RBI reaffirmed India’s position as one of the fastest-growing large economies, backed by domestic demand, public capex and improving external visibility. GDP Growth Projections; FY26: 7.4 per cent, Q1 FY27: 6.9 per cent and Q2 FY27: 7.0 per cent.

The central bank highlighted that consumption resilience, infrastructure spending and trade diversification are providing a stable growth base even as global conditions remain fragile.

Inflation Outlook: Benign, But No Room for Negligence

Headline inflation remains well contained, though the RBI acknowledged mild firming ahead. CPI Inflation Projections; FY26: 2.1 per cent (revised slightly upward from 2.0 per cent), 

Q4 FY26: 3.2 per cent, Q1 FY27: 4.0 per cent and Q2 FY27: 4.2 per cent.

Governor Malhotra emphasised that inflation risks are evenly balanced, with food prices stabilising but global energy and geopolitical risks still present. The RBI’s stance reflects confidence but not complacency.

Liquidity and Bond Markets: RBI Staying Actively Engaged

The central bank reiterated its commitment to proactive liquidity management, ensuring:

• Smooth transmission of policy rates
• Stability in short-term money markets
• Orderly G-sec yield movements

This is particularly important as government borrowing remains elevated and global bond markets stay volatile.

Regulatory Measures: Incremental but Investor Relevant

Alongside rates, the RBI announced several regulatory proposals aimed at strengthening financial system trust and efficiency. Key Announcements were:

• Unified Lead Bank data portal to improve district-level credit tracking
• Compensation up to Rs 25,000 for small digital fraud victims
• Stricter mis-selling norms for financial products
• Bank lending to REITs permitted with safeguards
• Gold loan LTV ratios to remain prudent and unchanged

These steps may not move markets immediately, but they strengthen long-term financial stability.

What This MPC Means for Markets

From a market perspective, this policy outcome offers clarity rather than surprise.

• Equities: Neutral to mildly positive, as rate uncertainty fades
• Banks & Financials: Stable margins, predictable credit environment
• Bond Markets: Comfort in policy continuity
• Rupee: Supported by macro stability and contained inflation

The RBI has effectively signalled that policy risk is no longer a dominant market variable.

The Bigger Picture: Policy Has Done Its Part

FY26 was about repair and recalibration; Inflation was tamed, Growth momentum was protected and Financial stability was preserved. With the final MPC meeting now behind us the baton shifts to; Earnings delivery, Fiscal execution and Global risk management. Monetary policy is no longer the swing factor.

Conclusion

By keeping rates unchanged in February, the RBI closed FY26 with a message of confidence and continuity. The easing cycle has run its course, inflation is under control and growth remains resilient.

For investors, this environment rewards stock selection over macro speculation, earnings over narratives and balance sheet strength over leverage. FY27 will not be about rate cuts; it will be about how effectively the economy converts stability into sustainable growth.

Disclaimer: The article is for informational purposes only and not investment advice.