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Policy-to-policy comparison between Dec 2025 RBI MPC and Feb 2026 MPC — covering rate action, stance, inflation, yields, liquidity, and market impact. |
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1) Policy Rate Action |
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Parameter |
Dec 2025 Policy |
Feb 2026 Policy |
Change |
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Repo Rate |
Cut by 25 bps → 5.25% |
No change (5.25%) |
Pause after easing |
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SDF |
5.00% |
5.00% |
No change |
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MSF / Bank Rate |
5.50% |
5.50% |
No change |
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Cumulative easing cycle |
Continued |
Cycle paused |
Shift to wait-and-watch |
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Interpretation |
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Dec 2025 = Easing move |
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Feb 2026 = Policy pause / consolidation |
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2) Monetary Policy Stance |
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Policy |
Stance Signal |
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Dec-25 |
Pro-growth / easing bias continuation |
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Feb-26 |
Neutral stance retained |
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Meaning |
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RBI is not committing to further cuts |
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Future moves data-dependent (inflation + growth) |
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3) Inflation Outlook Shift |
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Metric |
Dec 2025 View |
Feb 2026 View |
Policy Impact |
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CPI trend |
Falling sharply |
Still benign but bottoming |
Cuts paused |
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FY26 CPI forecast |
Low |
~2.1% |
Comfortable but base effect risk |
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Food inflation |
Negative / soft |
Stabilizing |
Watch zone |
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Key policy logic |
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Inflation extremely low partly due to base effect |
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RBI cautious about rebound before cutting more |
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4) Growth Outlook Change |
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Metric |
Dec-25 |
Feb-26 |
Change |
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GDP outlook |
Improving |
Upgraded |
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FY26 GDP forecast |
~7.3% earlier |
~7.4% |
Upward revision |
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Domestic demand |
Recovering |
Strong |
Positive |
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Interpretation |
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Dec cut supported growth recovery |
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Feb pause reflects confidence growth is self-sustaining |
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5) Bond Yield Movement |
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Period |
Yield Direction |
Drivers |
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Post Dec 2025 cut |
Yields fell |
Rate easing rally |
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Pre-Feb policy |
Yields rising |
Fiscal borrowing + global cues |
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Post Feb 2026 |
Yields up 8–9 bps |
No fresh easing signal |
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10-yr G-Sec range context |
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~6.65–6.80% zone trading |
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Upward bias due to: |
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Govt borrowing |
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Global yields |
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Supply pressure |
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6) Liquidity & System Funding |
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Factor |
Dec-25 |
Feb-26 |
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Liquidity stance |
Supportive |
Supportive but calibrated |
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Tools used |
Rate cuts + liquidity |
Swaps, OMOs, FX ops |
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Objective |
Push credit |
Maintain stability |
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7) Currency & External Context |
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Parameter |
Change Seen |
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INR movement |
Volatile |
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RBI action |
Dollar sales + swaps |
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Drivers |
FII outflows, global volatility |
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8) Market Rate Transmission |
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Segment |
After Dec Cut |
After Feb Pause |
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Loan rates |
Softening bias |
Stable |
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FD rates |
Peak / topping out |
Stable |
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CP/CD rates |
Softer |
Range-bound |
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Corporate bonds |
Spread compression |
Flat to mild widening |
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9) Equity & Risk Asset Impact |
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Policy |
Market Reaction |
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Dec 2025 cut |
Risk-on rally support |
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Feb 2026 pause |
Neutral to mildly negative |
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Reason: |
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Markets had priced more cuts |
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Pause = liquidity still ok but no fresh trigger |
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10) Why RBI Cut in Dec but Paused in Feb |
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Dec 2025 – Reasons to Cut |
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Inflation collapsing |
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Growth uneven |
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Need credit push |
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Global easing cycle |
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Feb 2026 – Reasons to Pause |
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Growth upgraded |
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Inflation bottoming |
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Base effect risk |
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Global uncertainty |
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Fiscal supply pressure |
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11) Side-by-Side Policy Signal Summary |
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Policy Lever |
Dec 2025 Signal |
Feb 2026 Signal |
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Repo rate |
Easing continues |
Easing paused |
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Stance |
Growth supportive |
Neutral |
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Inflation risk |
Downside |
Balanced |
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Growth risk |
Downside |
Upside |
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Liquidity |
Expand |
Maintain |
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Yield direction |
Down |
Up / stable |
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INR |
Stable |
Managed volatility |
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12) Market Interpretation (Street View) |
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Dec Policy Takeaways |
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Start of terminal easing zone |
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Bond rally |
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Duration trade strong |
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Feb Policy Takeaways |
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Terminal rate likely reached |
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Carry > duration |
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Yield curve steepening risk |
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13) Forward Guidance Shift |
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Aspect |
Change |
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Rate trajectory |
From “more cuts possible” → “pause” |
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Policy bias |
From dovish → neutral |
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Inflation narrative |
From disinflation → stabilization |
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Growth narrative |
From recovery → strength |
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Bottom Line |
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What changed materially between Dec 2025 → Feb 2026 |
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1 |
Rate cycle: |
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Dec = Cut |
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Feb = Pause |
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2 |
Policy stance: |
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From easing bias → Neutral hold |
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3 |
Inflation view: |
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From falling → Bottoming / base-effect watch |
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4 |
Growth outlook: |
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Upgraded → Less need to stimulate |
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5 |
Bond yields: |
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Falling → Rising / supply pressured |
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6 |
Liquidity: |
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Expansion → Maintenance mode |
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