The report highlighted that recent policy signals from the RBI, including its neutral stance, indicate that the Monetary Policy Committee (MPC) is now focused on supporting growth and maintaining financial stability, rather than continuing with rate cuts. It stated, “We are of the view that the RBI has reached the end of its rate cutting cycle and would now opt for a long pause.”
The RBI Governor noted in his policy statement that “benign inflation provides scope to support growth while maintaining financial stability. We remain committed to… sustaining growth momentum.”
According to the report, this statement, together with the neutral policy stance, suggests that the MPC has reached the end of its easing cycle and will leave policy rates unchanged for an extended period. The MPC unanimously decided to leave the policy rate unchanged at its last meeting in February, following a 25 basis point cut at the previous meeting in December 2025. The monetary policy stance remained neutral, reflecting a balanced approach to growth and inflation risks.
The repo rate is now unchanged at 5.25 percent. On the liquidity front, the RBI reiterated that it would continue to maintain adequate liquidity in the system as and when required. The central bank has also postponed providing its full-year growth and inflation forecasts until April 2026 as it awaits the release of the new CPI and GDP series later this month.
According to the Bank of Baroda report, the April 2026 policy will provide greater clarity on the outlook for full-year growth and inflation. Given the current macroeconomic backdrop and revised inflation projections, the report believes that the RBI has completed the rate cutting phase and will now remain on pause for an extended period.
Published on February 9, 2026
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