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The decisions of the first Monetary Policy Committee for the year 2026 were announced by Reserve Bank of India Governor Sanjay Malhotra on Friday. This is the first policy review after the Union Budget 2026 and the recent India-US trade agreement, on which the eyes of Dalal Street and the economic world were fixed. RBI has not made any change in the interest rates this time and has maintained it ‘status quo’. The Monetary Policy Committee of the Reserve Bank has decided to keep the repo rate unchanged at 5.25% as per expectations. Governor Sanjay Malhotra has announced that the MPC has decided to maintain ‘neutral’ policy stance.
Interest rates stable, ‘neutral’ stance intact
The RBI Governor stressed that the Indian economy remains strong and the domestic inflation and growth outlook is positive. The Governor also made it clear that future monetary policy will be guided by the new inflation data based on the revised series. Earlier, in the year 2025, the Reserve Bank of India, adopting a liberal stance, had reduced the repo rate by a total of 125 basis points. In the last Monetary Policy Committee meeting of the year held in December 2025, the repo rate was further reduced by 25 basis points, bringing it down from 5.5% to 5.25%.
Know the cuts last year and when?
February: Adopting a cautious approach at the beginning of the year, the first cut of 25 basis points was made.
April: Reduction by 25 basis points again for the second time to maintain economic momentum.
June: This was the biggest cut of the year, where the Reserve Bank reduced the repo rate by 50 basis points.
December: During the last policy review at the end of the year, a final cut of 25 basis points was made in the repo rate to 5.25%.
What did the Governor say on demand and consumption after the first MPC of 2026?
Highlighting the drivers of the economy, the Governor said improving corporate performance and sustained growth in the informal sector will boost manufacturing. On the demand front, rural demand remains stable, while urban consumption is expected to grow further. Further, Governor Malhotra pointed out that the recently concluded India-EU Free Trade Agreement and the potential India-US trade deal will provide strong support to the export momentum.
What did the Governor say on economic projections?
Expressing confidence over the future economic outlook, the RBI Governor has revised upward the growth rate estimates for the first and second quarter of the next financial year, which are expected to be 6.9% and 7% respectively. On the inflation front, inflation is estimated to be 2.1% for the current financial year, while it is expected to be 4% in the first quarter of FY 2027 and 4.2% in the second quarter. Speaking about the global situation, the Governor said that foreign exchange reserves are at a very healthy level of $723.8 billion at the end of January and the current account deficit is also expected to be ‘moderate’ in the current financial year.
RBI monetary policy
Interest Rates and Stance: RBI has not made any change in the repo rate and has kept it at 5.25%. The MPC has maintained its stance of ‘neutral’. GDP estimate hike: GDP growth estimates for the first (Q1) and second (Q2) quarters of FY 2027 have been revised upward, which are now expected to be 6.9% and 7%, respectively. Inflation outlook: Retail inflation for the current financial year is estimated at 2.1%. At the same time, it is likely to be 4% in the first quarter of financial year 2027 and 4.2% in the second quarter. Barring precious metals, underlying inflationary pressures remain subdued. Big relief to MSME sector: The limit on unsecured loans for micro, small and medium enterprises has been doubled to Rs 20 lakh. Safeguard on digital fraud: A framework will soon be brought in to compensate customers up to Rs 25,000 for losses in digital fraud. Additionally, special measures have been proposed to protect senior citizens from digital fraud.Financial Market Reforms: Banks will now be allowed to lend to real estate investment trusts. Also, branch opening rules for some types of NBFCs will be relaxed. Foreign Exchange Reserves: India’s foreign exchange reserves are at a very strong level of $ 723.8 billion. Exports and Consumption: The Governor said that trade agreements will boost exports. Along with this, GST reforms, monetary easing and low inflation will support private consumption. Next meeting: The next meeting of RBI MPC is scheduled for April 6 to 8, 2026.
