RBI Expected To Hold Key Rates Steady Amid Inflation Concerns

The Reserve Bank of India is likely to maintain its key policy rates unchanged in its February 2026 review, amid rising inflation concerns, according to Crisil. Despite recent growth, Crisil foresees GDP moderation in the next fiscal and anticipates higher retail inflation due to global trade and fiscal challenges.

The Reserve Bank of India is projected to maintain the status quo on key policy rates in its upcoming monetary policy review, scheduled for February 4-6, 2026, as per Crisil's assessment.

After cutting the repo rate by 25 basis points to 5.25 percent in December, the RBI's neutral stance signals a cautious, data-driven approach.

Crisil's report highlights the upward tick in retail inflation from 0.71 percent in November to 1.33 percent in December, still below RBI's 2-4 percent target, yet prompting a policy pause.

RBI Governor Sanjay Malhotra recently described India's situation as a 'rare goldilocks period' due to remarkable economic growth and low inflation. The GDP growth prediction for the year is upped to 7.3 percent, but Crisil warns of a potential slowdown to 6.7 percent in the coming fiscal amid global trade challenges and shrinking domestic fiscal backing.

Retail inflation in India is expected to climb to 5.0 percent in fiscal 2026-27 from an estimated 2.5 percent currently, driven by minimal food inflation this year and moderated commodity prices, according to Crisil.

Moreover, Crisil projects crude oil prices to stay moderate, averaging USD 62-67 per barrel this fiscal, with calendar 2026 prices estimated at USD 60-65 per barrel.