RBI Repo Rate: After FM Nirmala Sitharaman’s Infra Push Budget 2026, Will Top Bank Reduce RR?

RBI Repo Rate: According to a report by Nuvama Research, the Reserve Bank of India (RBI) is likely to keep the policy repo rate (the interest rate at which RBI lends money to commercial banks in times of fund shortage) unchanged, maintaining a neutral stance in the upcoming Monetary Policy Committee (MPC) review.

The report stated that the country’s top bank is likely to maintain a “neutral” stance on February 6, 2026. The Monetary Policy Committee (MPC) of RBI would announce the policy review decision by Governor Sanjay Malhotra. Experts believe the repo rate may stay unchanged at 5.25 percent amid robust gross domestic product (GDP) growth forecasts of 7 percent and inflation around 2.0-2.25 percent.

RBI Repo Rate-No Change Possible

Keeping the repo rate unchanged would signal stability in a benign inflationary environment. This would also help in supporting economic growth without “overheating” the Indian economy to align seamlessly with the growth theme of Union Budget 2026-27.

Steady rates would ensure that borrowing costs remain predictable for all stakeholders, enabling private investment to complement government spending on schemes such as India Semiconductor Mission 2.0 and Biopharma SHAKTI.

The neutral stance keeping in mind the concept of Viksit Bharat 2047 and a $30-40 trillion GDP by 2047 could help in sustaining momentum in priority sectors such as energy transition and digital infrastructure. It would foster a positive and powerful environment for job creation via services growth and Yuva Shakti initiatives.

Would RBI Defy Odds To Hike Repo Rate? Impact Explained

Though highly unlikely, a repo rate increase to 5.5-5.75 percent would raise the borrowing costs for banks in India. This could translate to higher loan EMIs for cars, businesses and homes, curbing investment and spending.

It may tighten liquidity, potentially slowing down the growth of GDP to prioritize inflation taming of pressures rise from global tariffs or food prices, while strengthening the Indian rupee through foreign inflows. A repo rate hike could be effective to counterbalance tax incentives and aggressive capex by inhibiting demand-pull inflation, ensuring fiscal discipline and supporting long-term stability for Viksit Bharat 2047 vision.

What If RBI Decides To Cut Repo Rate?

A cut of 25 basis points by the Reserve Bank of India could translate to low lending rates to boost consumer spending, credit flow, housing demand and business expansions while giving a push to bank liquidity. However, it may end up risking higher inflation through import cost pressure from a weaker rupee and capital inflows.

All in all, unchanged rates offer the safest path, harmonizing Budget 2026’s capex surge with Viksit Bharat 2047 goals.