Read for 4 minutesMumbaiFebruary 20, 2026 09:09 PM IST
India’s macroeconomic fundamentals, including the external sector, are healthy and robust in the medium term, Reserve Bank of India (RBI) Governor Sanjay Malhotra wrote in the minutes of the February Monetary Policy Committee (MPC) meeting released on Friday.
The story continues below the video
He said the recent trade agreements, especially with the EU and the US, would not only strengthen exports and current account but also bring in higher investments.
In the meeting, the six-member rate setting panel unanimously decided to keep the repo rate unchanged at 5.25%. The MPC, by a 5:1 majority, voted to keep the policy stance ‘neutral’. RBI raised FY26 GDP forecast to 7.4% from 7.3% earlier and Q1 and Q2 FY27 growth forecasts by 20 basis points (bps) each to 6.9% and 7% respectively.
The Consumer Price Index (CPI) inflation estimate was revised to 2.1% from 2%.
“Growth prospects appear to remain broadly unchanged in the inflation outlook. Moreover, several recent developments in the external sector have given room for further optimism,” Malhotra wrote in the minutes of the meeting.
“Given the current state of the economy and its outlook – soft growth and benign inflation – I think the current policy rate is appropriate,” he said.
RBI Deputy Governor Poonam Gupta said that the risk of inflation from external sources such as oil prices, commodity prices or exchange rate depreciation is currently perceived to be limited. With capacity utilization rates holding steady at 74%, she said, easy economic activity is unlikely to lead to higher inflation.
The story continues below this announcement
“The policy rate has already been cut by 125 bps in four of the last six meetings; the transmission of the last rate cut announced in December 2025 is yet to end; and as we await data from the new series for both GDP and inflation, another rate cut is not warranted at this point,” Gupta wrote.
Retail inflation stood at 2.75% in January, according to the latest CPI series.
Ram Singh, an external member of the MPC, voted to change the policy stance to accommodative, saying the exact quantum and timing of the next rate cut will depend on incoming data, but the growth-supportive stance remains fairly stable with a stable inflation outlook.
“Furthermore, given the stable inflation and economic outlook, a shift in ‘accommodation’ stance could facilitate rate cuts that have so far been reduced by lowering market rates, yields for sovereign and corporate bonds, and rates between the two,” Singh wrote.
The story continues below this announcement
MPC member and RBI Executive Director Indranil Bhattacharya said headline inflation is well below target throughout 2025-26 and is expected to be close to target in H1 FY27, offering scope for the current policy rate and stance to remain supportive of growth without escalating inflation.
“As long as the flexible inflation targeting (FIT) remains within the tolerance band of the framework and does not suppress inflation expectations, a modest upward revision in projected inflation does not warrant a change in the policy rate,” he said.
Saugata Bhattacharya, another external MPC member, said the new GDP, CPI inflation and IIP series provide a clear lens on the growth-inflation balance. “Assessing the macro-economic environment and awaiting new economic data series, I think the policy rate is appropriate,” he said.
MPC member Nagesh Kumar said the bright economic growth outlook amid a persistently benign inflationary trend gives India a chance to remain in the ‘Goldilocks’ zone for longer.
