Why did the RBI keep the repo rate at 5.25%?

The central bank judged that growth risks eased after the India-US trade deal and improving EU access, while inflation trends look more manageable. Holding steady provides stability for borrowing costs and the rupee, and buys time to monitor transmission before considering a pivot. This supports a smoother policy path for markets.

How does the decision affect India bond yields?

Guidance points to a contained 10-year range near 6.6% to 6.8%, with curve shape driven by inflation data, issuance, and fiscal signals. A steady policy rate reduces volatility at the front end, while term premia adjust to supply and risk appetite. Staggered entries can help manage timing risk.

What should U.S. investors watch next?

Focus on India inflation releases, RBI minutes, and fiscal updates that could alter issuance plans. Monitor the dollar and U.S. yields, since stronger moves can influence rupee and EM flows. Watch bank results for deposit costs and loan growth, which show how transmission evolves under a longer policy pause.

What is the near-term outlook for the rupee?

A stable policy rate and improving trade backdrop support reduced FX volatility. With RBI liquidity management smoothing money markets, hedging costs may be steadier. Currency moves will still track the dollar, oil prices, and portfolio flows. A range-bound profile is plausible if inflation and fiscal signals stay supportive.

Global Market Insights

RBI Holds at 5.25% on February 6 as US, EU Deals Lift Outlook

ByHuzaifa Zahoor February 6, 2026

RBI keeps repo rate at 5.25% after its February 6 policy meeting, signaling a longer pause as US and EU trade deals reduce external risks. For U.S. investors, this steadier backdrop supports predictable funding costs, calmer currency moves, and a tighter yield range near 6.6% to 6.8% for India’s 10-year. We see more focus on liquidity operations, transmission to bank lending, and the rupee’s path, which shapes returns for EM debt funds and cross-border corporate issuers.