New Delhi, February 6: The Reserve Bank of India’s Monetary Policy Committee is set to announce its decision on the key policy rate this Friday. Economists predict that the RBI will refrain from making any changes this month, following an interest rate cut in December 2025. However, all eyes will be on the bank’s future policy signals.
The three-day meeting of the Monetary Policy Committee began on Wednesday. According to Radhika Rao, Executive Director and Senior Economist at DBS Bank, the RBI may adopt a flexible policy in light of strong economic growth and reduced global risks following trade agreements with the United States.
Rao stated, “Despite declining inflation and ongoing pressure on the rupee, challenges in deposit accumulation and risks of portfolio outflows may prevent further rate cuts.”
It is anticipated that the RBI will focus more on cash management, stabilizing the bond market, and currency management. Government bond purchases may continue during this quarter and from April to June 2026.
The RBI is expected to rely on direct liquidity measures, bond stability, and currency management strategies, with bond purchases continuing through this quarter and into April-June 2026.
Economists note that despite the easing of the policy interest rate, there has been a consistent rise in government bond yields recently. This trend suggests that the RBI may maintain the status quo in its monetary policy.
A report from SBI Research stated, “We believe that the selection of eligible securities is what can influence the effectiveness of OMO operations, even if the total amount of liquidity injection remains unchanged.” It further noted, “Therefore, the RBI is likely to maintain the status quo in the upcoming policy.”
The most significant change since the last monetary policy meeting has been the trade agreements between India and both the European Union and the United States. Following these agreements, tariffs imposed on India have dropped from 50% to 18%.
According to SBI Research, India is now among the countries with the lowest tariffs in Asia. This development is expected to enhance the competitiveness of Indian products in global markets and strengthen exports.
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