UBI report: RBI may further reduce the repo rate by 25 basis points to 5% at the February policy meeting

UBI report: According to a Union Bank of India report, the Reserve Bank of India (RBI) may lower the repo rate by 25 basis points (bps) during its February monetary policy meeting, bringing the benchmark rate down to 5%.

According to the analysis, given the central bank’s dovish policy direction, there is potential for a last 25 basis point rate decrease in February or April of 2026.

It pointed out that the RBI has often mentioned low inflation and muted underlying pricing pressures.

According to the analysis, inflation pressures seem even more mild when the effect of gold’s roughly 50 basis point inflation is taken into account.

We anticipate a final 25bps rate reduction in February or April of 2026. Even though the date of the final rate drop is often difficult to predict, we cannot rule out the potential of a final 25bps rate decrease in the February 26 meeting to a 5.0% repo rate given the dovish policy direction,” the research said.

The article did note, however, that it is still unclear when the ultimate rate decrease would occur. The impending change of the GDP and Consumer Price Index (CPI) base years, which is scheduled for February 2026, is one important consideration.

When the updated data is available, the Monetary Policy Committee (MPC) may decide to take a wait-and-watch stance and reevaluate inflation and growth patterns.

At the policy meeting in December, the MPC said that the policy repo rate would be lowered by 25 basis points to 5.25 percent.

Following the completion of the three-day Monetary Policy Committee (MPC) meeting, which took place from December 3 to 5, RBI Governor Sanjay Malhotra announced the decision.

The governor said that before reaching a unanimous decision to enact the rate drop immediately, the MPC conducted a thorough analysis of changing macroeconomic circumstances and the prognosis for the future.

The next meeting of the RBI’s Monetary Policy Committee is now set for February 4, 5, and 6, 2026. Given changing inflation dynamics and impending data revisions, market players will be keenly monitoring the meeting for clues on when and how much further easing is likely.