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Informist, Friday, Dec. 5, 2025

 

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--RBI Governor Malhotra begins monetary policy announcement 
--RBI Malhotra: MPC voted to cut repo rate 
--RBI Malhotra: MPC voted to cut repo rate by 25 bps to 5.25% 
--RBI Malhotra: MPC voted 6-0 to cut repo rate 
--RBI Malhotra: SDF rate adjusted to 5.00% 
--RBI Malhotra: MSF and Bank rate adjusted to 5.50% 
--RBI Malhotra: MPC decided policy stance to remain 'neutral' 
--RBI: MPC Singh was of the view stance should be accommodative from neutral 
--RBI: Minutes of Dec MPC meeting to be released on Dec 19

 

MUMBAI – The Reserve Bank of India's Monetary Policy Committee Friday lowered the policy repo rate by 25 basis points to 5.25% in a unanimous decision, the central bank Governor Sanjay Malhotra said. The committee also retained the 'neutral' policy stance but external member Ram Singh was of the view that the stance be changed to accommodative. 

 

While the rate-setting panel's decision was broadly on expected lines, a large section of economists and market participants had said the MPC could hold interest rates after GDP data showed the economy had expanded much quicker than expected in the September quarter.

 

The committee has now lowered the repo rate by 125 bps in 2025. It started lowering interest rates in February with a 25-bps cut, followed by another 25-bps cut in April and a larger-than-expected 50-bps reduction in June.

 

Malhotra announced that the RBI would buy government securities of INR 1 trillion through open market operations and also conduct a three-year dollar/rupee buy/sell swap of $5 billion this month to inject durable liquidity into the system.

 

The RBI lowered its inflation projection for the current financial year by 60 bps to 2.0%. The central bank raised its GDP growth projection for FY26 to 7.3% from 6.8?rlier. 

 

Malhotra said that headline inflation is likely to be softer than the earlier projections while growth 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," the governor said. 

 

CPI inflation fell to a record low of 0.25% in October while GDP growth was higher than expected at 8.2% in the September quarter. The RBI raised the growth forecasts for the December quarter, March quarter and the June quarter of 2026. It pegged Jul-Sept 2026 GDP growth at 6.8%. 

 

Malhotra said that despite an unfavourable and challenging external environment, the Indian economy has shown remarkable resilience and is poised to register high growth.

 

"The headroom provided by the inflation outlook has allowed us to remain growth supportive. We will continue to meet the productive requirements of the economy in a proactive manner while ensuring macroeconomic stability," he said. 

 

With the repo rate lowered to 5.25%, the Standing Deposit Facility has come down to 5.00% and the Marginal Standing Facility and bank rate to 5.50%. Minutes of the December MPC meeting will be published on Dec. 19. The next meeting of the MPC is scheduled for Feb 4-6.  End

 

US$1 = INR 89.89

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

 

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