RBI Likely To Maintain Rate Pause Through 202627: ICICI Bank Report

RunWithRugs · 2026-02-25T13:44:46+00:00

The ICICI Bank report suggests low chances for a monetary policy rate hike due to stable core inflation, projecting a prolonged pause in rates until 2026-27. While inflation risks remain limited, optimistic growth revisions have been noted, leading to a 'low-for-longer' interest rate environment.

RunWithRugs

2026-02-25 13:44:46

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(MENAFN- KNN India) ** New Delhi, Feb 21 (KNN)** The chances of a monetary policy rate hike remain low due to benign core inflation, according to a report by ICICI Bank Global Markets.

The report said a prolonged pause in policy rates is expected through 2026–27, with the focus shifting to injecting durable liquidity to ensure effective monetary transmission, according to ANI.

** Inflation Outlook Seen as Stable**

The analysis noted that upside risks to inflation appear limited, citing the latest core inflation reading under the new Consumer Price Index (CPI) series. While the revised CPI showed an upward bias in food inflation, core inflation remained below expectations.

The report also stated that the recent rise in oil prices supports the case for a rate pause. Although CPI projections were revised upward due to higher precious metal prices, most members of the Monetary Policy Committee (MPC) viewed the overall inflation outlook as benign.

** Growth Revised Upwards**

Minutes of the monetary policy meeting held earlier this month indicated a more optimistic view on economic growth. Members referred to positive high-frequency indicators and recent trade agreements with the United States and the European Union.

As a result, growth projections for the first half of 2026–27 were revised upward by 20 basis points.

The report added that while the improved growth outlook reduces the likelihood of further rate cuts, a ‘low-for-longer’ interest rate environment is likely, with headline inflation expected to remain near target.

** Policy Decision**

On February 6, the Monetary Policy Committee of the Reserve Bank of India unanimously decided to keep the policy repo rate unchanged at 5.25 per cent and maintain a neutral stance.

According to ICICI Bank Global Markets, the MPC is likely to focus on improving transmission using various tools, especially as bond yields and wholesale deposit rates have risen since the December rate cut.

** (KNN Bureau)**

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