India Holds Rates, Revises Up FY25/26 GDP Forecasts
The Reserve Bank of India (RBI) maintained its key repo rate at 5.25% during its February 2026 meeting, the first monetary policy decision of the year, after cutting it by 25 bps at the December meeting, in line with forecasts, amid confidence in a softer inflation outlook and improving growth prospects. India’s annual inflation accelerated to 1.33% in December 2025 but remained below the RBI’s tolerance band of 2%–6%, while GDP grew 8.2% in the September quarter. The decision comes after the Union Budget boosted government spending and US–India trade deals raised expectations of stronger economic growth. On the economic outlook, the RBI raised its GDP growth forecast for FY2025/26 to 7.4%, up from its earlier estimate of 7.3%. GDP growth for H1 of FY27 was also revised upward, with growth projected at 6.9% in Q1 and 7.0% in Q2. Meanwhile, inflation for FY26 is projected at 2.1%. The RBI also kept the SDF rate at 5.0% and the MSF rate at 5.50%.
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