How much will RBI reduce interest rates?
RBI Interest Rate: Every common man, who has taken a home loan or car loan, is waiting for 10 am on 6th February. At the same time, RBI Governor Sanjay Malhotra will announce the decisions of the MPC. This is the first monetary policy review of the year 2026. In such a situation, this is the biggest question. Will the central bank start the new year with a cut in interest rates, or will the general public have to wait a little longer? Let us know what market leaders and experts are predicting this time.
Will the trend of interest rate cuts stop?
Last year i.e. in 2025, the Reserve Bank had given big relief to the borrowers. The series of interest rate cuts that started from February 2025 had brought down the repo rate by a total of 125 basis points (1.25 percent) in a year. Last time, a reduction of 0.25 percent was also made in the policy of December 2025. After this aggressive cut, most economic experts now believe that RBI may remain in a ‘wait and watch’ situation this time.
According to market experts, there is very little scope for change in the repo rate in this meeting. The central bank would like to see what impact the cuts made in the last one year have had on the ground level and the economy. Therefore, there is every possibility that interest rates will remain stable on 6th February.
The country’s growth rate is also satisfactory
Deepak Aggarwal, CIO (Debt), Kotak Mahindra AMC, believes that the current economic conditions are in favor of maintaining stability in the policy. He says that the inflation rate is within the target set by RBI and the pace of the country’s growth rate also remains satisfactory.
There is adequate amount of cash (surplus liquidity) in the system and the government is seriously working on reducing the fiscal deficit (fiscal consolidation). Considering all these factors, Deepak Aggarwal estimates that MPC may decide to maintain the repo rate at 5.25 percent only. That is, if you are expecting immediate EMI reduction, you may be a little disappointed.
What does it mean for investors and real estate?
Even if there is no change in the repo rate, the market environment is becoming favorable for investment. Ankur Jalan, CEO of Golden Growth Fund (GGF) says that the effect of the total cut of 1.25 percent last year is now visible. Banks are gradually reducing the deposit rates, the direct benefit of which will be available to the borrowers sooner or later.
The investment environment is improving, especially for Alternative Investment Funds (AIFs) focusing on the real estate sector. A stable interest rate regime helps investors in long-term planning. Industry experts believe that the stance of MPC will remain supportive of growth.
Why is the focus on liquidity apart from interest rates?
The interesting thing is that this time the focus of market players is not only on interest rates but more on ‘liquidity’ (flow of cash in the market). According to Sachin Savarikar, managing partner of Arth Bharat Investment Managers IFSC LLP, the market wants to understand what stance RBI takes on liquidity. This is also important because government borrowing still remains at a high level and foreign portfolio investors (FPIs) are continuously selling.