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RBI Holds Repo Rate Steady at 6.5% for Fourth Consecutive Meeting

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  Published in Stocks and Investing on Friday, February 6th 2026 at 4:13 GMT by Zee Business
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Mumbai, February 6th, 2026 - The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) today announced its bi-monthly monetary policy review, and as widely anticipated, has decided to hold the repo rate steady at 6.5%. This marks the fourth consecutive meeting where the committee has refrained from adjusting the key lending rate, signaling a commitment to maintaining stability amidst a cautiously optimistic economic outlook.

The decision, revealed at 11:00 AM IST, reflects the RBI's assessment of prevailing economic conditions. While inflation remains within the target range, concerns regarding global volatility and potential domestic headwinds have prompted the MPC to adopt a 'wait-and-watch' approach. The committee emphasized that future policy adjustments will be data-dependent, closely monitoring inflation trends, economic growth indicators, and global developments.

A Deep Dive into the Implications

This continued stability in the repo rate has significant ramifications for a broad spectrum of financial products and investment avenues. Let's examine the impact on key areas:

Home Loans: A Respite for Borrowers

The sustained repo rate provides a welcome respite for both existing and prospective home loan borrowers. Existing borrowers will continue to benefit from the current interest rate regime, experiencing no immediate increase in their monthly EMIs. For new borrowers, while rates aren't decreasing, the lack of an increase provides a degree of predictability, allowing for more confident financial planning. However, experts advise borrowers to also consider factors such as their own financial stability and future income prospects before committing to long-term loan agreements.

Fixed Deposits: Predictability for Savers

FD investors can also breathe a sigh of relief. A stable repo rate indicates that banks are unlikely to revise their FD rates significantly in the near term. This provides a level of certainty for those relying on fixed income streams, particularly senior citizens. While returns may not be spectacular, the consistency offered by FDs remains attractive for risk-averse investors. It's worth noting that the real rate of return (FD rate minus inflation) is currently positive, making FDs a reasonably viable option for wealth preservation.

Mutual Funds: A Mixed Bag

The impact on mutual funds is more nuanced. A stable interest rate environment generally fosters positive sentiment in the equity market, potentially benefiting equity mutual funds. However, the performance of these funds remains heavily influenced by underlying market conditions, corporate earnings, and investor behavior. Debt mutual funds, particularly those with longer durations, may see limited upside. Bond yields are unlikely to fall further given the stable repo rate, capping potential gains. Investors are advised to diversify their portfolios and consult with financial advisors to align their investment strategy with their risk appetite and financial goals.

Understanding the Repo Rate and RBI's Mandate

The repo rate, as a crucial monetary policy tool, represents the rate at which the RBI lends funds to commercial banks. By adjusting this rate, the RBI influences the cost of borrowing for banks, which in turn affects lending and deposit rates across the economy. The primary mandate of the RBI is to maintain price stability (controlling inflation) while fostering economic growth. Balancing these two objectives is a complex task, requiring careful consideration of various domestic and international factors.

Factors Behind the Hold Decision

Several key factors underpinned the MPC's decision to maintain the status quo. Firstly, inflation, while still above the medium-term target of 4%, has shown signs of moderation in recent months. Secondly, economic growth, although positive, remains uneven, with certain sectors performing better than others. Thirdly, global economic uncertainty, fuelled by geopolitical tensions and fluctuating commodity prices, continues to pose a risk. The RBI has also been carefully observing the impact of previous monetary policy actions, assessing their effectiveness before implementing further changes.

Looking Ahead

Analysts anticipate that the RBI will continue to adopt a cautious approach in the coming months. A significant shift in inflation trends or a substantial deterioration in economic growth would likely prompt a policy response. The next MPC meeting, scheduled for April 2026, will be crucial in determining the future trajectory of the repo rate. Investors and borrowers should closely monitor economic indicators and RBI statements to stay informed and make informed financial decisions.