Source money control
The Reserve Bank of India (RBI) is widely expected to keep its benchmark interest rate unchanged at the upcoming February monetary policy meeting, according to an MPC poll, as policymakers shift their focus toward liquidity management and improving the transmission of past rate actions.
Most economists surveyed believe the Monetary Policy Committee (MPC) will maintain the repo rate at its current level, citing easing inflation pressures, stable growth prospects, and the need to assess the impact of earlier policy moves. With inflation largely within the RBI’s tolerance band, the central bank is seen prioritising financial stability over immediate rate changes.
Attention is now turning to liquidity conditions in the banking system, which have tightened in recent weeks due to factors such as tax outflows and government cash balances. Analysts expect the RBI to deploy a mix of tools—including variable rate repos, open market operations, or fine-tuning measures—to ensure adequate liquidity and prevent undue stress in money markets.
Another key area of focus is policy transmission. Despite cumulative rate hikes over the past cycle, the pass-through to lending and deposit rates has been uneven across sectors. Economists anticipate the RBI will reiterate the importance of faster and more effective transmission so that monetary policy actions are reflected in borrowing costs for consumers and businesses.
The central bank’s commentary on growth and inflation will be closely watched, especially amid global uncertainties, volatile capital flows, and evolving commodity prices. While a rate cut is not expected in the near term, market participants will look for signals on the future policy path and the RBI’s readiness to act if conditions change.
For now, the consensus view is that February’s policy will be one of continuity, with steady rates and calibrated liquidity measures aimed at supporting growth while keeping inflation in check.
