The RBI’s rate-setting panel on Friday decided to unanimously cut the policy repo rate by 25 basis points (bps) from 5.50 per cent to 5.25 per cent amid a strong second quarter GDP growth, low retail inflation and a depreciating Rupee.
The monetary policy stance continues to be neutral.
The RBI also announced liquidity enhancement measures including, conducting an open market operation (OMO) purchase of Government Securities for ₹1 lakh crore this month.
The central bank will also conduct a three-year buy/sell US Dollar for $5 billion.
The repo rate was last cut by 50 basis points from 6 per cent to 5.50 per cent in the June 2025 policy review. Then, the monetary policy stance was changed from accommodative to neutral.
RBI Governor Sanjay Malhotra said, “Both headline and core inflation are expected to be around the 4 per cent target during the first half of FY27. The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps. Growth, while remaining resilient, is expected to soften somewhat.”
“Thus, the growth-inflation balance, especially the benign inflation outlook on both headline and core, continues to provide the policy space to support the growth momentum. Accordingly, the MPC unanimously voted to reduce the policy repo rate by 25 bps to 5.25 per cent. The MPC also decided to continue with the neutral stance,” he added.
Published on December 5, 2025
