The Reserve Bank of India (RBI) is expected to lower the repo rate by 25 basis points at its upcoming monetary policy meeting in February 2026.
If this happens, the repo rate will come down to 5%.
In December 2025, the RBI had already reduced the rate by 25 basis points to 5.25%.
Markets are now closely watching the February meeting for signals on further rate cuts.
Room for Further Rate Cuts
A recent report by Union Bank of India (UBI) suggests that the RBI may have scope for one final 25 basis point cut either in February or April 2026.
The report cites the RBI’s accommodative approach, controlled inflationary pressures, and limited domestic price increases as reasons for potential easing.
Interestingly, the report highlights that if the impact of rising gold prices on inflation is removed, inflationary pressures look even milder.
This adds weight to the possibility of another repo rate reduction.
However, UBI also notes that timing a final cut is tricky since some key economic data are still awaited.
CPI-GDP Revision Could Influence Decisions
The Consumer Price Index (CPI) and Gross Domestic Product (GDP) base years are due for revision in February 2026.
The RBI’s Monetary Policy Committee (MPC) may wait for this updated data before making any final decisions.
RBI Governor Sanjay Malhotra has emphasized that every policy decision considers macroeconomic conditions, growth, and inflation.
What This Means for Loans and Borrowing
The next RBI MPC meeting is scheduled for February 4-6, 2026.
Any decision to cut rates further could directly impact home loans, auto loans, and corporate borrowing.
Both consumers and the markets are closely watching this meeting, as it may determine whether the trend of lower interest rates continues in India.
