All eyes are on the Reserve Bank of India ( RBI ) this week as Governor Sanjay Malhotra prepares to announce the outcome of the Monetary Policy Committee (MPC) meeting for February. Scheduled for Friday, 6 February, the decision is expected to influence interest rates, borrowing costs, liquidity, and investor sentiment in the coming months.
When and Where to Follow the Meeting
The RBI’s MPC is holding its final policy review of FY26 from 4–6 February. Governor Malhotra will reveal the policy decision at 10 AM on Friday, followed by a press briefing at noon outlining the committee’s rationale, economic outlook, and stance on liquidity. The announcement will be streamed live on RBI’s website, YouTube, and X, with updates also available on ABP Live.
What’s at Stake
The February meeting follows the Union Budget 2026 and the India-US trade deal, two key developments that could influence the central bank’s decisions. Analysts expect the MPC to likely maintain the repo rate, citing stable growth and inflation trends. Over the past year, the RBI has cut the repo rate by a total of 125 basis points, and some experts suggest there could still be room for one more reduction to ease borrowing costs further.
In the December 2025 review, the MPC cut the repo rate by 25 basis points to 5.25%, after two consecutive meetings without changes. The committee has kept the policy stance neutral, with the SDF rate at 5.00% and the MSF/bank rate at 5.50%, gradually easing borrowing costs for homebuyers and corporate borrowers.
Why the Repo Rate Matters
The repo rate, at which the RBI lends money to banks, directly affects loan interest rates. Rate increases usually raise borrowing costs, while cuts make loans more affordable. The cumulative reductions over the past year have helped improve affordability across sectors such as real estate and infrastructure.
Also read : Union Budget 2026-27: Cigarette Prices Jump as Government Introduces New Tobacco Tax
Real Estate and Economic Outlook : RBI
Industry experts believe a stable policy stance will support ongoing growth. Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, highlighted that the government’s increase in public capital expenditure to ₹12.2 lakh crore for FY27 could generate a multiplier effect, boosting infrastructure, real estate, and employment. He noted that past rate cuts have already improved homebuyer affordability and demand. A steady interest rate environment would further reinforce buyer confidence, housing momentum, and developer activity, supporting broader economic growth.
Liquidity in Focus
While rates may remain unchanged, market participants are closely watching liquidity conditions. Sachin Sawrikar, Managing Partner at Artha Bharat Investment Managers IFSC LLP, said elevated government borrowing and foreign portfolio outflows are tightening domestic liquidity. Heavy government bond supply and continued FPI dollar purchases are increasing yields and limiting credit availability.
Investors will be paying attention to how the RBI addresses these pressures using its liquidity management tools, as this will signal market stability and confidence. According to Sawrikar, the MPC is likely to emphasize macro stability and smooth transmission, suggesting that liquidity management may matter more than immediate rate changes.
Key Takeaways for Borrowers
Even if the repo rate stays unchanged, the RBI’s forward guidance, inflation outlook, and liquidity signals could affect lending rates, bond yields, and market confidence. The February MPC meeting is expected to focus on stability and measured communication, rather than dramatic policy shifts, though global developments and capital flows could give even a pause significant implications for borrowers and markets alike.