RBI Credit Policy LIVE Analysis | Aditya Pagaria Explains Rate Pause Impact

The Reserve Bank of India (RBI) kept its repo rate unchanged at 5.25% in its February 2026 Monetary Policy Committee (MPC) review, maintaining a neutral stance amid benign inflation (around 2-2.5%, below the 4% target) and resilient growth. Senior Fixed Income Fund Manager Aditya Pagaria from Axis Mutual Fund discussed the policy's implications. He noted the RBI's cumulative 125 bps rate cuts and ₹17 lakh crore liquidity measures over 1.5 years have supported the economy effectively, signaling the end of the easing cycle with a likely long pause.Despite earlier cuts, 10-year G-Sec yields hardened to around 6.7-6.72% due to demand-supply mismatches (excess supply of ~3.5-4 lakh crore in G-Secs and SDLs) and market anticipation of the pause.Pagadia highlighted portfolio shifts to shorter-duration, accrual-focused strategies (e.g., 1-3 year corporate bonds offering ~200 bps spreads over repo) over volatile long-duration G-Secs. He advised retail and senior investors to consider flexible hybrid funds for managed exposure without timing the market. Short-term yields may see compression post March, while banking remains healthy with low NPAs. The rupee faces reduced pressure post trade deals, expected to stabilize.