PwC’s Ranen Banerjee has suggested that the Reserve Bank of India (RBI) may hold its key policy rates at the next Monetary Policy Committee (MPC) meeting, citing robust growth and low inflation.

Banerjee, Partner and Economic Advisory Services leader at PwC, said any rate cut at this stage would be “wasting a bullet.” The MPC, headed by RBI Governor Sanjay Malhotra, is scheduled to meet from February 4-6, 2026, marking the last policy review of the current fiscal year.

Observing that private investment is not highly sensitive to interest rates, Banerjee noted that capital expenditure is constrained more by demand uncertainty than borrowing costs. Capacity utilisation in India currently hovers around 70-75%, and a significant pick-up in private investment is expected only when utilisation nears 85%.

He said, “Firing a bullet when it is not needed as we are having good growth and contained inflation. So, there is no need for a rate action at this point of time.”

In December, the six-member MPC had unanimously cut the repo rate by 25 basis points to 5.25% while retaining a neutral stance. This was the fourth rate cut since February 2025, bringing the cumulative reduction to 125 basis points from a high of 6.5%.

The RBI is mandated by the government to maintain CPI-based retail inflation at 4%, with a tolerance band of 2% on either side. Currently, inflation remains within the target range, giving the central bank flexibility to maintain status quo on interest rates.