Repo Rate cut expected in Feb 2026: Why RBI could lower rates | Explained

New Delhi: Good news is expected for those planning to buy a home and the people who are paying huge EMI for home loans. After the monetary policy relief of December 2025, the burden on your pocket is expected to be lighter in February 2026 as well. The Reserve Bank of India (RBI) is expected to give a big gift to people.

According to a recent detailed report by the Union Bank of India (UBI), the central bank may maintain its soft stance in the Monetary Policy Committee (MPC) meeting to be held in February 2026. It is estimated that RBI may further cut the repo rate by 25 basis points i.e. 0.25 percent.

Currently, the repo rate is at 5.25 percent. If the estimate proves to be correct, then the repo rate will come down directly to 5 percent. This will have a direct impact on the interest rates of your home loan, car loan and personal loan. Banks will reduce their interest rates, which will significantly reduce your monthly instalment (EMI) and you will see savings in the monthly budget.

Now the question arises, why is RBI continuously cutting interest rates? The answer lies in the inflation figures. The Union Bank's report emphasizes that inflation is now largely under control and the pressure to rise in prices has weakened.

RBI has also agreed on many occasions that the inflation situation is no longer so scary. A very interesting analysis in the report is that if the inflation (about 0.50 percent) increased due to the rise in gold prices removed, then the actual inflation rate seems to be even lower. However, taking a decision in February 2026 can be a bit challenging for the RBI because at that time the base year (Base Year) of CPI (CPI) and GDP (GDP) is going to change. It will be important to see how inflation and growth rate figures fall on these new parameters.

The year 2025 has proved to be no less than a blessing for borrowers. This year RBI has left no stone unturned to reduce interest rates. Let us inform you that in 2025, the central bank slashed the repo rate four times.

At the beginning of the year itself, a relief of 0.25-0.25 percent was given in February and April. After that, in the month of June, RBI surprised everyone with a huge reduction of 0.50 percent. In December, it was again reduced by 0.25 percent, which brought the repo rate to 5.25 percent. Now, this rate may go down further after the possible reduction in February 2026, which will help in increasing the flow of cash into the economy and increasing the demand for loans.