RBI May Hold Interest Rates Steady For Extended Period, Says BoB Report

New Delhi, Feb 9 (KNN) The Reserve Bank of India (RBI) is likely to have reached the end of its interest rate–cutting cycle and may now opt for a prolonged pause, unless fresh inflation or growth data present unexpected developments, according to a report by Bank of Baroda (BoB).

Policy Signals Point to Hold

The report noted that recent policy signals from the RBI, including the retention of a neutral monetary policy stance, indicate a shift in focus towards supporting economic growth while maintaining financial stability, rather than pursuing further rate cuts, reported ANI.

It stated that the central bank appears to have limited room to lower rates further under current conditions.

The RBI Governor, in his latest policy statement, said, “Benign inflation provides the leeway to remain growth-supportive while preserving financial stability. We remain committed to sustain the growth momentum.”

Rates Unchanged, Clarity Awaited

The Monetary Policy Committee (MPC) unanimously decided to keep policy rates unchanged at its February meeting, following a 25 basis points reduction in December 2025. The repo rate currently stands at 5.25 per cent, with the policy stance remaining neutral to balance growth and inflation risks.

On liquidity, the RBI reiterated that it would ensure adequate liquidity in the system as needed. The central bank also deferred its full-year growth and inflation projections to April 2026, citing the upcoming release of a new Consumer Price Index (CPI) and Gross Domestic Product (GDP) series.

April Policy Key for Outlook

According to the Bank of Baroda report, the April 2026 policy review is expected to provide greater clarity on the outlook for growth and inflation. Based on current macroeconomic conditions and revised inflation estimates, the report concluded that the RBI is likely to keep interest rates on hold for an extended period.

(KNN Bureau)