• In February 2026, The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.25% in its latest monetary policy announcement.
  • The decision was taken by the Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra.
  • The RBI decided not to change the rate because inflation is currently under control at around 2.1%. The central bank wants to support economic growth while also keeping prices stable.

WHAT IS REPO RATE?

  • Repo rate is the interest rate at which the Reserve Bank of India lends short-term money to commercial banks.
  • Simple Meaning
    • When banks need money for a short time, they borrow from RBI by giving government securities as security.
    • The interest charged on this borrowing is called the repo rate.
WHY IS IT IMPORTANT? Repo rate helps RBI to:
  • Control inflation
  • Manage money supply
  • Control credit flow
  • Support economic growth
Any change in repo rate directly affects:
  • Loan interest rates
  • EMI amounts
  • Business investment
  • Overall economic activity

IMPACT OF REPO RATE ON INDIAN ECONOMY

When Repo Rate Is Reduced If RBI reduces repo rate, the following happens:
  • Loans become cheaper.
  • Home loans, car loans, and business loans have lower interest rates.
  • People spend more.
  • Companies invest more.
  • Small businesses and farmers get easier access to credit.
  • More money circulates in the economy.
  • Economic growth increases.
This step is usually taken when growth is slow. WHEN REPO RATE IS INCREASED If RBI increases repo rate:
  • Loans become expensive.
  • EMI increases.
  • Spending reduces.
  • Inflation is controlled.
  • Credit growth slows down.
  • Foreign investors may invest more due to higher returns.
  • Savings in banks increase.
  • Rupee may strengthen.
This step is usually taken when inflation is high. ABOUT MPC The Monetary Policy Committee (MPC) is a six-member body of RBI. Its main role is to decide:
  • Repo rate
  • Reverse repo rate
  • Policy stance
Its main objective is:
  • Maintain price stability
  • Support economic growth
The MPC meets at least four times a year.

MEMBERS OF THE MPC

  1. Governor of RBI – Chairperson
  2. Deputy Governor in charge of monetary policy – Member
  3. One RBI official nominated by Central Board – Member
  4. 3 external experts nominated by Government of India – Members
This structure ensures balance between government and RBI in decision-making.