RBI likely to keep interest rates steady as inflation edges up, Crisil says

New Delhi: The Reserve Bank of India is expected to keep key policy rates unchanged at its upcoming monetary policy review meeting, slated during February 4-6, 2026, according to Crisil.

The monetary policy committee had reduced the repo rate by 25 basis points in its December meeting to 5.25 per cent. Their policy stance remained neutral, indicating a data-dependent approach going ahead.

"We expect the RBI to stay put on policy rates given the creep up in inflation," Crisil said in a report.


India's retail inflation rose from 0.71 per cent in November to 1.33 per cent in December, marking a moderate uptick. Though it remained below the RBI's target range of 2-4 per cent.

RBI Governor Sanjay Malhotra in December characterised India's current macroeconomic moment as a "rare goldilocks period", which currently marks high economic growth and exceptionally low inflation. Given strong growth reported inthe July-September quarter, the RBI raised its GDP growth projection at 7.3 per cent for the full year, up by half a percentage point.

Against this backdrop, Crisil expect India's GDP growth to moderate to 6.7 per cent next fiscal compared with the first advance estimate of 7.4 per cent this fiscal.

"Challenging global trade environment, moderating domestic fiscal support and waning support from statistical factors, namely a low base and this fiscal's low deflator, are expected to drag growth next fiscal. However, nominal growth is expected to be higher due to rising inflation," Crisil said.

The National Statistics Office's first advance estimates pegged real GDP growth at 7.4 per cent for this fiscal 2025-26, compared with 6.5 per cent last fiscal.

Moving on to inflation, Crisil expects India's retail inflation to rise to 5.0 per cent next fiscal 2026-27 from an estimated 2.5 per cent in the current fiscal 2025-26.

"Low food inflation of this fiscal should lend a statistical lift to inflation next year. However, softer commodity prices and continued impact of the Goods and Services Tax rationalisation should keep inflation within the RBI's target band," it said.

Crisil also gave a view on crude oil prices. It expects crude oil prices to remain benign this fiscal, averaging USD 62-67 per barrel.

In calendar 2026, it sees prices averaging USD 60-65 per barrel. Brent crude oil prices fell to USD 62.7 per barrel average in December, down 1.4 per cent month-on-month and 15.1 per cent year-on-year.

At the time of filing this report, crude oil traded at USD 59 per barrel.