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RBI Likely to Hold Rates Steady as Inflation Rises, Says Crisil Report

The Reserve Bank of India is expected to keep key policy rates unchanged in its upcoming February 2026 review, according to a Crisil report. This comes as India's retail inflation rose to 1.33% in December 2025, though it remains below the RBI's target band. Crisil forecasts GDP growth will moderate to 6.7% next fiscal year from an estimated 7.4% in the current one. The agency also projects retail inflation will rise to 5.0% in the 2026-27 fiscal year.

Key Points: RBI to Keep Rates Unchanged Amid Inflation Uptick: Crisil

  • RBI expected to hold rates in Feb 2026
  • Inflation rose to 1.33% in Dec 2025
  • GDP growth may moderate to 6.7% next fiscal
  • Crisil sees inflation rising to 5.0% in FY27
2 min read

RBI expected to keep interest rates steady as inflation creeps up: Crisil

Crisil expects RBI to hold policy rates in Feb 2026 review as inflation creeps up. GDP growth seen moderating next fiscal.

"We expect the RBI to stay put on policy rates given the creep up in inflation, - Crisil"

New Delhi, January 19

The Reserve Bank of India is expected to keep key policy rates unchanged at its upcoming monetary policy review meeting, slated during February 4-6, 2026, according to Crisil.

The monetary policy committee had reduced the repo rate by 25 basis points in its December meeting to 5.25 per cent. Their policy stance remained neutral, indicating a data-dependent approach going ahead.

"We expect the RBI to stay put on policy rates given the creep up in inflation," Crisil said in a report.

India's retail inflation rose from 0.71 per cent in November to 1.33 per cent in December, marking a moderate uptick. Though it remained below the RBI's target range of 2-4 per cent.

RBI Governor Sanjay Malhotra in December characterised India's current macroeconomic moment as a "rare goldilocks period", which currently marks high economic growth and exceptionally low inflation. Given strong growth reported inthe July-September quarter, the RBI raised its GDP growth projection at 7.3 per cent for the full year, up by half a percentage point.

Against this backdrop, Crisil expect India's GDP growth to moderate to 6.7 per cent next fiscal compared with the first advance estimate of 7.4 per cent this fiscal.

"Challenging global trade environment, moderating domestic fiscal support and waning support from statistical factors, namely a low base and this fiscal's low deflator, are expected to drag growth next fiscal. However, nominal growth is expected to be higher due to rising inflation," Crisil said.

The National Statistics Office's first advance estimates pegged real GDP growth at 7.4 per cent for this fiscal 2025-26, compared with 6.5 per cent last fiscal.

Moving on to inflation, Crisil expects India's retail inflation to rise to 5.0 per cent next fiscal 2026-27 from an estimated 2.5 per cent in the current fiscal 2025-26.

"Low food inflation of this fiscal should lend a statistical lift to inflation next year. However, softer commodity prices and continued impact of the Goods and Services Tax rationalisation should keep inflation within the RBI's target band," it said.

Crisil also gave a view on crude oil prices. It expects crude oil prices to remain benign this fiscal, averaging USD 62-67 per barrel.

In calendar 2026, it sees prices averaging USD 60-65 per barrel. Brent crude oil prices fell to USD 62.7 per barrel average in December, down 1.4 per cent month-on-month and 15.1 per cent year-on-year.

At the time of filing this report, crude oil traded at USD 59 per barrel.

- ANI

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Reader Comments

P
Priya S
As a small business owner, stable interest rates are a relief for planning. But the projected slowdown in GDP growth next year is a bit worrying. Need more domestic demand drivers to keep the momentum going. 🏭
R
Rohit P
Low crude oil prices are a massive blessing for our economy! Saves forex and keeps fuel prices in check. Hope this trend continues through 2026. RBI holding rates steady makes perfect sense in this scenario.
S
Sarah B
The jump from 2.5% to 5.0% projected inflation for next fiscal is quite steep. While it's within the target band, the pace of increase needs careful monitoring. The RBI's data-dependent stance is the right approach.
V
Vikram M
With strong growth at 7.3%, the focus should remain on sustaining it. A slight moderation to 6.7% next year is still excellent by global standards. The RBI should use this period to strengthen our economic foundations. 🇮🇳
K
Karthik V
Respectfully, I think the article and the projections are a bit too optimistic. Global trade headwinds are real, and statistical base effects can't be ignored. We should prepare for more volatility, not just a gentle moderation.
M
Meera T

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