RBI MPC: Central bank may not cut repo rates amid global economic uncertainty, says SBI report

Ahead of the Reserve Bank of India's Monetary Policy Committee (RBI MPC) meeting in February, the State Bank of India (SBI) said in a report that the rate-setting panel is expected to maintain the status quo on the repo rate in its policy announcement.

The RBI MPC announcement scheduled for Friday is likely to see no repo rate cut amid continued global economic uncertainty, pressure on government bond yields and volatility in the domestic currency, the SBI report said.

It further noted that, despite earlier MPC rate cuts, the central bank will hold rates in its February policy as challenges posed by macroeconomic and global factors persist.

Government bond yields have consistently shown hardening in recent times despite the RBI easing its policy rates, SBI said in the report.

This could limit the transmission of the RBI committee's monetary policy actions. Therefore, SBI said the RBI "is thus likely to maintain status quo in the upcoming policy”.

Since the last RBI MPC in December, one of the most significant economic developments in India has been the India-EU Free Trade Agreement finalisation, as well as the announcement of the US-India trade deal. Both the deals have led to a sharp reduction in Indian goods, with the United States lowering its tariff on India to 18%.

The report highlighted that India now has one of the lowest tariff rates among Asian countries, which is expected to support export competitiveness and improve trade prospects.

The report, however, pointed out that the global economy remains uncertain. It noted that the Geo-Economics Stress Index indicates heightened uncertainty leads to economic stress with a lag of three to four months, suggesting risks may emerge in the near term.

The report also noted that SBI expected rate cuts by the US Federal Reserve in the coming days due to a slack in the labour market, stagnant real disposable incomes, and a reduced inflationary impact. This could affect global capital flows and currency movements.

Against this backdrop, the Indian rupee has remained volatile, see-sawing between 89 and 92 per dollar over the past two months.

RBI MPC meet: When and where to watch?

The RBI MPC meeting is for three days from 4 to 6 February. On 6 February, Friday, Governor Sanjay Malhotra will announce the RBI MPC decisions at 11 AM.

One can watch the RBI MPC announcements on the official YouTube and other social media accounts of the central bank.

This is Malhotra's first MPC announcement of 2026, and comes days after the Union Budget 2026 was presented.