MPC Poll | RBI likely to hold rates today, focus shifts to liquidity management, transmission

Several industry participants also expect the MPC to continue with a supportive monetary stance, even as policy rates remain unchanged.

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is widely expected to maintain interest rates its February policy review , with industry experts flagging the end of the rate-cut cycle and a sharper focus on “liquidity management, transmission efficiency and financial conditions.” The MPC is set to meet on February 6, 2026.

With the RBI having already cut the repo rate by 125 basis points since February 2025, Moneycontrol's poll of 19 economists, treasury heads and market participants said the central bank now will ensure durable liquidity support to the system.

“Conditions favour policy stability. With inflation well below the target, growth momentum intact, surplus system liquidity, and fiscal consolidation reaffirmed, conditions favour policy stability,” said Deepak Agrawal, CIO - Debt, Kotak Mahindra AMC.

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"Accordingly, the committee is expected to maintain the repo rate unchanged at 5.25 percent," Agarwal said. However, he added that forward guidance is likely to remain mildly dovish, underscoring a data-dependent stance and preserving flexibility for recalibration, should the growth-inflation trade-off evolve.

Supportive stance, pause on rates

Several industry participants also expect the MPC to continue with a supportive monetary stance, even as policy rates remain unchanged.

“With the RBI having cut the repo rate by 125 basis points since February 2025 and banks gradually reducing deposit rates, the investment environment is turning increasingly favourable for Category II real estate-focused AIFs (Alternate Investment Funds),” said Ankur Jalan, CEO, Golden Growth Fund (GGF).

“We expect the MPC to continue with a supportive monetary stance to ensure adequate liquidity and smoother transmission, which will further enhance the appeal of real estate AIFs for domestic investors seeking stable, risk-adjusted returns while supporting project execution and sectoral stability,” Jain said.

Lalit Parihar, Managing Director, Aaiji Group, echoed similar views.

"We expect the RBI to maintain monetary easing. Given the evolving geo-economic environment and easing domestic inflation, this is an opportune moment to accelerate growth with ample liquidity infusion," he said, adding that further easing would improve affordability for homebuyers and support housing demand.

Liquidity in focus

Market participants, however, also increasingly believe that the policy focus is shifting from interest rates to liquidity conditions and financial transmission.

“The upcoming RBI MPC meeting will be closely watched as markets focus on the central bank’s approach on managing liquidity and financial conditions amid elevated government borrowings and persistent foreign portfolio investor outflows,” said Sachin Sawrikar, Managing Partner, Artha Bharat Investment Managers IFSC LLP.

“Policy effectiveness at this stage relies more on calibrated liquidity management and stable financial conditions, rather than immediate adjustments to interest rates,” added Sawirkar.

He also added that continued USD purchases by FPIs (Foreign Portfolio Investors), heavy government bond supply and shrinking surplus liquidity are tightening financial conditions, pushing yields higher and constraining credit availability , despite steady policy rates.

End of the rate-cut cycle

A growing consensus among economists and fund managers is that the RBI may have reached the end of its easing cycle.

“Given that there is no pressing concern around growth or inflation, the RBI is expected to hold rates unchanged in its upcoming policy,” Sawrikar said. “A neutral stance is also likely to be maintained, as the central bank may want to keep the option open for one more rate cut if needed. However, for now, it seems we have come to an end of the rate cutting cycle.”

Experts expect liquidity tools such as Open Market Operations (OMOs), and possibly a CRR cut, to take centre stage.

Several estimates point to fresh OMO purchases of around Rs 1 lakh crore for the February–March 2026 period to support durable liquidity, as surplus conditions have tightened despite large past injections.

Inflation outlook

On inflation, most experts do not expect any immediate revision in projections, with the MPC likely to wait for clearer data under the new CPI (Consumer Price Index) base year.

Headline CPI remains exceptionally low, at 1.3 percent in December 2025, and has stayed below 2 percent for six consecutive months, driven largely by food deflation.

However, economists caution that the new 2024 base year CPI series, starting with the January print, could introduce an upward bias of 20-40 basis points due to higher weights for core components and the inclusion of newer services, such as e-commerce and OTT platforms.

While inflation is expected to rise gradually in FY27, most experts believe the RBI will avoid immediate forecast changes until the new series stabilises.

Growth projections

A similar caution is expected on the growth front.

With GDP (Gross Domestic Product) data shifting to the new base year (2022–23) and revisions underway, experts say the MPC is unlikely to alter growth projections immediately.