RBI Holds Repo Rate at 6.25% in February 2026 MPC Meeting, Shifts to Accommodative Stance

The Reserve Bank of India's Monetary Policy Committee (MPC) unanimously decided to hold the repo rate at 6.25% during its February 2026 bi-monthly review, while making the significant move of changing its policy stance from "neutral" to "accommodative." This shift signals that the RBI is now more inclined towards rate cuts in the near term, provided inflation remains within its comfort zone.

What the Stance Change Means

An accommodative stance means the MPC is unlikely to raise rates and is open to cutting them when macroeconomic conditions permit. This is the first time since the post-pandemic recovery phase that the RBI has adopted this position. Governor Malhotra noted that India's consumer price inflation has moderated to 4.3% in January 2026, comfortably within the 2-6% target band, and that global commodity prices remain benign.

The decision comes at a time when India's GDP growth has moderated slightly to 6.5% for FY26, down from the earlier estimate of 6.8%. The RBI appears to be prioritising growth support without abandoning its inflation-targeting mandate.

Impact on Borrowers and Depositors

For existing home loan borrowers on floating rates, the status quo means EMIs remain unchanged for now. However, the accommodative stance raises the probability of a 25 basis point cut in April 2026, which would bring the repo rate to 6.00% and eventually translate into lower lending rates. New borrowers may want to wait before locking into fixed-rate products.

Fixed deposit investors should note that banks may begin reducing deposit rates in anticipation of future repo rate cuts. Those seeking to lock in current FD rates of 7-7.5% for senior citizens should consider doing so before the next MPC meeting. Short-duration debt mutual funds may also see capital gains as yields compress.

Market Reaction

Bond markets rallied immediately after the announcement, with the benchmark 10-year government bond yield dropping 8 basis points to 6.92%. The Nifty 50 gained 0.8% in intraday trading as rate-sensitive banking and real estate stocks led the advance. The rupee held steady at 85.2 against the US dollar, reflecting market confidence in the RBI's balanced approach.

Analysts at major brokerages expect the RBI to deliver 50-75 basis points of cumulative rate cuts over the next 12 months, with the first reduction likely in April 2026.