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RBI Rate-Cut Cycle Ends, Long Pause Ahead Amid Inflation Risks: BoB

The Reserve Bank of India has likely concluded its rate-cutting cycle and is expected to enter a prolonged pause, according to a Bank of Baroda report. The Monetary Policy Committee unanimously held rates steady in its February meeting, maintaining a neutral stance. The central bank has deferred its full-year growth and inflation forecasts until April 2026, awaiting new economic data. The current focus is on supporting growth while preserving financial stability, with limited room for further rate cuts.

Key Points: RBI Ends Rate-Cut Cycle, Enters Long Pause: BoB Report

  • End of rate-cut cycle
  • Long pause on policy rates
  • Neutral monetary policy stance
  • Focus on growth & financial stability
2 min read

RBI likely at end of rate-cut cycle, to opt for long pause as inflation risks tilt up: BoB Report

RBI likely at end of rate-cutting cycle, opts for long pause as inflation risks rise. MPC holds rates, maintains neutral stance.

"We believe that the RBI has come to an end of its rate cutting cycle and would now opt for a long pause. - Bank of Baroda Report"

New Delhi, February 9

The Reserve Bank of India has likely come to the end of its rate-cutting cycle and is expected to opt for a long pause, as there appears to be limited room to lower interest rates further unless the new series of CPI and GDP throw up unforeseen surprises, according to a report by Bank of Baroda.

The report highlighted that recent policy signals from the RBI, including its neutral stance, indicate that the Monetary Policy Committee (MPC) is now focused on supporting growth while preserving financial stability, rather than continuing with rate cuts.

It stated, "We believe that the RBI has come to an end of its rate cutting cycle and would now opt for a long pause."

RBI Governor, in his policy statement, noted that "Benign inflation provides the leeway to remain growth-supportive while preserving financial stability. We remain committed to... sustain the growth momentum."

According to the report, this statement, along with the neutral policy stance, suggests that the MPC has reached the end of its easing cycle and will keep policy rates on hold for an extended period.

The MPC unanimously decided to keep policy rates unchanged in its latest February meeting, following a 25 basis points cut in the previous meeting held in December 2025. The stance of monetary policy was retained at neutral, reflecting a balanced approach between growth and inflation risks. The repo rate is now unchanged at 5.25 per cent.

On the liquidity front, the RBI reiterated that it would continue to maintain sufficient liquidity in the system as and when required. The central bank also deferred providing its full-year growth and inflation forecasts to April 2026, as it is awaiting the release of the new CPI and GDP series later this month.

According to the Bank of Baroda report, the April 2026 policy will offer more clarity on the outlook for full-year growth and inflation.

Given the current macroeconomic backdrop and revised inflation projections, the report believes that the RBI has concluded its rate-cutting phase and is now set to remain on pause for a prolonged period.

- ANI

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Reader Comments

R
Rohit P
As someone with an EMI, I was hoping for one more small cut, but I understand the caution. Global oil prices are unpredictable and food inflation can spike any time. Better to be safe than sorry. The pause is the right call for now.
A
Aman W
The focus should completely be on growth now! So many MSMEs are still struggling. While I respect the RBI's decision, I hope this "long pause" doesn't become an excuse for inaction if the new GDP data shows we need more stimulus. Jai Hind!
S
Sarah B
Clear and prudent communication from the central bank. Waiting for the new data series is the smart move. Provides a solid foundation for the next fiscal year's policy. Good for long-term economic planning.
K
Karthik V
The key is in the last line – "prolonged period". Markets hate uncertainty, so this signal is important. Fixed deposit rates might also stabilize now, which is good news for retirees like my parents. 🏦
N
Nisha Z
I just hope this "neutral stance" and focus on growth translates to easier credit for small entrepreneurs on the ground. Sometimes the policy sounds good in Mumbai but doesn't help my kirana store in Lucknow. The real test is implementation.

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