MUMBAI: On Friday, the Reserve Bank of India announced a reduction of 25 basis points in the policy repo rate, lowering it to 5.25 percent.
This decision was shared by RBI Governor Sanjay Malhotra following the conclusion of a three-day Monetary Policy Committee (MPC) meeting that took place from December 3 to 5.
The Governor noted that the MPC conducted a comprehensive review of the changing macroeconomic landscape and future forecasts before reaching a unanimous agreement on the rate cut, which takes effect immediately.
During the announcement, the Governor stated, “The MPC convened on December 3rd, 4th, and 5th to discuss and make decisions on the policy repo rate. After thoroughly evaluating the evolving macroeconomic conditions and outlook, the MPC unanimously voted to lower the policy repo rate by 25 basis points to 5.25 percent, with immediate effect.”
With this announcement, the most recent MPC meeting has concluded.
This rate reduction comes after a period of strong macroeconomic performance, bolstered by an impressive GDP growth of 8.2 percent in the second quarter of the current financial year and minimal inflation rates.
According to data from the Ministry of Statistics and Programme Implementation (MoSPI), India’s retail inflation fell significantly to 0.25 percent in October 2025, marking an all-time low.
This change marks a departure from the previous monetary policy announcement on October 1, when the RBI opted to maintain the repo rate at 5.5 percent.
During that review, the MPC also unanimously resolved to keep the policy rate unchanged after meetings on September 29 and 30 as well as October 1 to assess both domestic and global economic conditions. During that time, the Governor mentioned that the committee voted to sustain the rate at 5.5 percent.
The current reduction is anticipated to enhance liquidity support and sustain momentum while GDP numbers remain strong and inflation continues its decline.
