RBI to Hold Firm on Repo Rate as MPC Review Looms

The Reserve Bank of India is expected to keep the repo rate unchanged at 5.25% in the upcoming Monetary Policy Committee review. The focus will likely be on liquidity management rather than rate adjustments, while monitoring the impact of global conditions and domestic economic indicators.

The Reserve Bank of India (RBI) is poised to maintain the status quo on its policy repo rate, leaving it steady at 5.25% in the upcoming review by the Monetary Policy Committee (MPC), as indicated by a Nuvama Research report.

Scheduled from February 4 to 6, the MPC meeting is expected to emphasize liquidity management. This approach comes as recent rate cuts' transmission to bank lending rates is still in progress, and bond yields have remained sticky.

The report highlights that while the Indian economy shows signs of stabilization, recovery remains uneven, and global uncertainties persist. Consequently, RBI is inclined to adopt a cautious, observant strategy, evaluating past policy impacts and focusing on managing liquidity effectively.

(With inputs from agencies.)