RBI MPC Likely to Hold Rates Amid Weak Transmission, Rising Inflation: Emkay Report

• The RBI's Monetary Policy Committee (MPC) is expected to keep policy rates unchanged at its February 2026 meeting, as per Emkay Global Financial Services.
• This decision follows aggressive rate cuts of 125 basis points over the past year, with inflation now edging higher and monetary transmission remaining weak.
• Emkay projects headline CPI inflation to rise significantly, from 0.8% in Q3 FY26 to 2.9% in Q4 FY26 and around 4% in H1 FY27, as base effects fade.
• A key concern is weak monetary transmission, with only about 9% of policy easing reflected in 10-year government bond yields despite substantial liquidity infusion.
• The report suggests the market will look for regulatory measures at the MPC meeting to ease banks' capital constraints and improve credit availability.