The Monetary Policy Committee of the Reserve Bank of India (RBI) on Friday kept the key interest rate, the repo rate, unchanged at 5.25% and maintained its policy stance at neutral.

The decision was taken by the MPC at its sixth and last bi-monthly policy meeting for the financial year 2025-26, held from Feb. 4 to Feb. 6.

Since February 2025, the central bank has cut the repo rate by a cumulative 125 basis points. In its December monetary policy, the RBI had cut the repo rate by 25 bps to 5.25% from 5.50%, and maintained its 'neutral' stance.

The MPC noted that the external headwinds have intensified since its last meeting; however, the economic outlook remains positive in light of the recent trade deals with the European Union and the US.

"On the growth front, economic activity remains resilient. The First Advance Estimates suggest continuing growth momentum, driven by domestic factors amidst a challenging external environment. The growth outlook remains favourable," the RBI said.

As per the First Advance Estimates, India's real gross domestic product (GDP) is estimated to grow at 7.4% year-on-year in the current financial year 2025-26.

The central bank also said that overall, the near-term domestic inflation and growth outlook remain positive, with the headline retail inflation, measured by the Consumer Price Index, remaining low at 0.7% in November 2025 and 1.3% in December 2025.

The CPI inflation for 2025-26 is now projected at 2.1%, with the fiscal fourth quarter growth at 3.2%. This retail inflation for the first two quarters of the financial year 2026-27 are projected at 4.0% and 4.2%, respectively.