RBI Likely to Slash Repo Rate by 25 bps to 5% in February: UBI Report
Union Bank of India sees scope for a 25 bps cut in RBI’s February policy review, citing benign inflation and dovish stance
Mumbai, Dec 22 : The Reserve Bank of India (RBI) could reduce its policy repo rate by 25 basis points in the upcoming February monetary policy review, potentially bringing the benchmark rate down to 5 per cent, according to a report by Union Bank of India (UBI).
The UBI report suggests that there is still room for monetary easing, with the possibility of one final 25 bps rate cut either in February or April 2026. The outlook is supported by the RBI’s dovish stance, repeated references to subdued inflationary pressures, and relatively mild underlying price movements.
UBI highlighted that inflation pressures appear even softer when adjusting for an estimated 50 basis points impact from higher gold prices, reinforcing the case for a further rate cut. However, the timing of this move remains uncertain.
A key factor that could influence RBI’s decision is the upcoming revision of the Consumer Price Index (CPI) and Gross Domestic Product (GDP) base years, scheduled for February 2026. The Monetary Policy Committee (MPC) may wait for the revised data before making a final call on additional easing.
In its December 2025 policy meeting, the MPC had already trimmed the repo rate by 25 basis points to 5.25 per cent. RBI Governor Sanjay Malhotra had stated that the decision was based on a detailed assessment of macroeconomic conditions and the outlook for growth and inflation.
The next MPC meeting, set for February 4–6, 2026, will be closely watched by market participants for cues on the timing and extent of further rate cuts amid evolving inflation trends and data revisions.
