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Informist, Friday, Dec. 5, 2025

MUMBAI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's fifth bi-monthly monetary policy statement for 2025-26 (Apr-Mar) detailed on Friday:

BANKERS 

LAKSHMANAN V., GROUP PRESIDENT & TREASURY HEAD, FEDERAL BANK

The Monetary Policy Committee has on a platter given what the market expected. A rate cut alongside long-dated swaps and open market operations, not only keeps the liquidity promise intact but will also keep the currency in relative balance. The market appears to have reacted positively on all counts. 

(Krity Ambey)

NITIN AGARWAL, HEAD OF TRADING, ANZ BANK INDIA

The RBI governor acknowledged that inflation has been low and more importantly, the Monetary Policy Committee did not let high growth dictate the policy. He conceded that growth may soften and in an environment of well-behaved inflation they had room to cut rates. He also didn't dwell on the fact that core inflation remains above 4%, rather he addressed the underlying nuances within the core inflation data. The kind of hawkishness markets had expected with the rate cut, was not there.

Some people were expecting an FX swap auction. To some extent, the market is now saying that because the governor announced the swap auction, that takes away from the total bond buyback amount that could have otherwise happened. Forward premiums have also cooled down due to the announcement of the swap.

(Pratiksha)

VINOD FRANCIS, GENERAL MANAGER AND CFO, SOUTH INDIAN BANK

The RBI's decision to trim the repo rate by 25 basis points while maintaining a neutral stance signals a calibrated shift towards supporting growth, without sending an overly aggressive easing signal to the markets. RBI's communication is straight forward that the apex bank will do whatever it takes to support growth, given the deflationary trend in the price gauge.

By combining a modest rate cut with a neutral stance, the MPC has tried to balance softening inflation with still-resilient growth. This is possiby necessitated by the weakening rupee and narrowing interest rate spread between India and the US market. 

(Krity Ambey)

ASHHISH VAIDYA, MD AND COUNTRY TREASURER, DBS BANK INDIA

Investors will still remain cautious on India's bonds in the face of global displacement of yield curves and high yields in developed markets, including Japan. Active foreign portfolio investment inflows will only come into India when the artificial intelligence supercycle ends in the developed markets, where you're still getting dollar-denominated debt for 4.00-4.50%. Even with Friday's measures, I see the 10-year gilt yield range-bound within 6.40% to 6.60%.

On the rupee, I don't think a quarter-percentage point rate cut will have any material impact. We should remain range-bound with 91 (a dollar) as the higher bound (for the dollar-rupee pair). Especially, with the US-India trade deal not progressing, other fundamentals such as the current and capital account should continue to put pressure on the rupee. The dollar also does not look like weakening materially immediately.

Pressures on the macro-economic stability remain in the global financial system. In a populous country like India, you have to look at the nominal growth and I think they've done the right thing in cutting rates. I'm not sure whether this alone with translate to growth, but if we do see a global slowdown in the next few quarters then a secondary rate cut cycle in India is very possible in 9-12 months' time. 

(Aaryan Khanna)

V.R.C. REDDY, HEAD OF TREASURY, KARUR VYSYA BANK

The Reserve Bank of India's policy had built considerable anticipation in the markets, with views split and a tight outcome expected. Eventually, the MPC (Monetary Policy Committee) delivered a 25 basis points rate cut while retaining its neutral stance. The RBI's earlier recognition of benign inflation trends seems to have provided the crucial comfort, creating room to support growth without compromising price stability.

The policy package felt like a bouquet of positives for the market, a rate cut, confirmed INR 1-trillion OMO (Open Market Operations) purchases in December, $5-billion FX swaps, and a clear assurance of comfortable liquidity conditions. Hard to ask for more in the current macro environment.

Interestingly, while markets were divided on the rate cut probability, the MPC voted unanimously, reflecting strong internal alignment. With inflation well anchored and growth projections steady, the outcome was received warmly across asset classes. The forward language on inflation also leaves some room for future accommodation, though further cuts may be less likely in the near term.

On the bond market front, sentiment has turned constructive. With the INR 1-trillion OMO lined up for December and expectations of continuation of OMO support in Jan-Mar, demand–supply pressures should ease meaningfully, opening scope for yields to compress further. The prospect of global index inclusion inflows in Jan-Mar strengthens the bullish bias.

The rupee had already adjusted ahead of policy after a notable depreciation earlier in the week. A move beyond 90 could draw calibrated RBI intervention. For banks, the repo cut could trim net interest margins, likely pushing any meaningful margin rebound to Jan-Mar or Apr-Jun of next fiscal.

From a rate outlook perspective, with the repo now at 5.25%, a long pause appears most probable. Supportive liquidity through OMOs and easing supply dynamics could keep yields trending lower. Under the current conditions, we expect the 10-year G-sec to drift towards 6.30% by March 2026 and 6.40% before the end of this month, barring global shocks. 

(Priyasmita Dutta) 

ECONOMISTS

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK

The RBI delivered a rate cut in line with our expectations, recognising the impending risks to growth and utilising the monetary space yielded by low inflation. While GDP growth had inched above 8% in the second quarter of FY26, the risk from external headwinds on exports continues to linger on. Moreover, the sustainability of the consumption pick-up during the festive season remains to be seen.

Given this backdrop, the rate cut rightly provides a further counter-cyclical push to consumption and growth. We anticipate inflation to remain below 4% up till the middle of the year (till June), which suggests that space for another rate cut remains in a situation that growth shows signs of faltering in the coming quarters. Alternatively, if the recent economic momentum continues, combined with a favourable trade deal announcement, this could be the end of the rate cut cycle. We expect GDP growth at 7.3% in FY26 and 6.5% in FY27. Inflation is expected at 2% in FY26 and 4% in FY27. The durable liquidity infusion through open-market-operation purchases and buy/sell swap are likely to help aid greater transmission of this rate cut, offsetting the drag from its recent foreign exchange intervention, and ease some of the upward pressure in the bond market. 

(Anjana Therese Antony)

RAJANI SINHA, CHIEF ECONOMIST, CAREEDGE RATINGS

The RBI MPC's decision to slash the policy repo rate by 25 basis points while maintaining the policy stance at 'neutral' is in line with our expectations. RBI chose to utilise the window of opportunity provided by very low inflation to provide impetus to growth. Moreover, the liquidity injecting measures announced should ensure smooth transition of policy rate cuts done so far.

While the growth data has been strong so far, there is no denying that heightened global uncertainty is likely to continue next year. GDP growth is likely to moderate in the coming quarters as goods exports feel the pinch of higher US tariffs and low base effect wears off. However, we expect GDP growth to still be healthy at 7.5% in FY26 and around 7% in FY27. With average inflation around 4% in FY27, real rate of interest would be in the neutral zone around 1.25%, implying no need for further rate cuts in 2026. 

(Anjana Therese Antony)

DHARMAKIRTI JOSHI, CHIEF ECONOMIST, CRISIL LTD.

In line with our expectations, the Monetary Policy Committee of the Reserve Bank of India has cut the repo rate by 25 basis points. The accompanying liquidity-enhancing measures, including open market purchases and forex swaps, underscore the growth-supportive nature of this policy decision.

This fiscal, economic data has surprised on both growth and inflation fronts, creating elbow room for the rate cut. Real GDP growth has surpassed expectations, reaching 8% in the first half of this fiscal, while retail inflation has decelerated sharply. 

The drop in headline inflation below the lower end of the RBI's target range of 2-6% has been driven by food inflation, with fuel inflation also subdued. Core inflation, excluding gold, was 2.6% in October, aided by goods and services tax cuts, indicating absence of excess demand pressure. Excess supply-chain capacity globally, particularly in China, also suggests limited upward pressure on goods inflation.

The repo rate cut is expected to support growth next fiscal, as monetary policy typically has a lagged effect. Today's liquidity-enhancing measures will also help transmit the policy rate cut to broader market interest rates.

We forecast India's GDP growth at 7% this fiscal, following an expected slowdown to 6.1% in the second half due to higher US tariffs and normalisation of government capital expenditure. Next fiscal, we expect GDP to grow a healthy 6.7%. We project inflation to remain benign at 2.5% this fiscal but rise to 5% next fiscal largely due to a statistical low base effect. 

(Anjana Therese Antony)

AURODEEP NANDI, INDIA ECONOMIST, NOMURA

There were many temptations on the path of inflation targetting – the temptation to target the rupee, to target deposit rates, to target growth, but by delivering a 25 basis points cut at a time when inflation is well below the RBI's lower tolerance bound of 2%, the RBI has wisely stuck to its core mandate. The announcements on durable liquidity injection alongside the rate cut suggests a penchant towards wholeheartedly reinforcing policy transmission rather than half-hearted rate cuts typically at the end of easing cycles, which dilute their transmission.  

(Shubham Rana)

MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES

With inflation persistently undershooting, the RBI expectedly found it harder to ignore its core mandate of inflation management and, therefore, finally delivered a unanimous 25-basis-point cut to 5.25%.

Clear near-term inflation visibility--and the need to shift away from an increasingly misplaced 1-year-ahead CPI anchor--has helped RBI with a December cut, after marking a fifth revision to FY26 CPI inflation.  

RBI's inflation forecast of 2.0% is now in line with ours of 1.92%, even as the governor reckoned the so-called "Goldilocks" narrative as he upgraded growth to 7.3%. Tactically smart and flexible forward guidance has also complemented Friday's rate easing, signalling openness to further easing—both on rates and liquidity. Importantly, while acknowledging repeated headline undershoots, the governor also conceded that underlying price pressures are even more subdued. 

The announced primary liquidity infusion of around INR 1.45 trillion is constructive, albeit modestly below our expectation of INR 2 trillion for the rest of FY26. Even so, this injection should meaningfully aid transmission, particularly as unsterilised foreign exchange intervention is likely to continue, making the liquidity support especially timely and effective at this stage of the cycle.

We reiterate rupee's softness should not be read as rate-easing deterrent ahead, but a natural growth stabiliser. 

(Shubham Rana)

GARIMA KAPOOR, DEPUTY HEAD OF RESEARCH AND ECONOMIST, ELARA CAPITAL

As expected, and staying committed to its mandate of inflation targeting central bank, the Reserve Bank of India's monetary policy committee cut policy repo rate by 25 basis points via a unanimous vote. We believe that there would be scope for another 25 bps cut this cycle, as inflation is expected to remain benign and despite high real GDP print there are no signs of overheating in the economy. The all-time low print of inflation ex-gold, silver, food and petroleum products (ex-of covid period) confirms the same.  

(Priyasmita Dutta)

ANITHA RANGAN, CHIEF ECONOMIST, RBL BANK

Announcing a rate cut of 25 basis points and maintaining a neutral stance along with INR 1 trillion OMO, RBI is perhaps once again front-loading its rate cut. With inflation revised downwards and growth outlook revised upwards, RBI indicates that inflation is giving headroom to support growth. 

Announcing OMO perhaps suggests that RBI is cognisant of G-sec yields. In addition, three-year FX swap suggests that RBI is aware of the FX risks. They have done swaps in the past and there is possibility of more support if required. 

Nevertheless, a neutral stance suggests that RBI is unlikely to acknowledge rate cuts once again in the near future, but the support from OMOs and FX could continue.

Overall dovish policy for now, with RBI watching all parameters. While the repo cut does put pressure on the currency front, FX swap suggest that RBI is cognisant of currency pressures. 

(Priyasmita Dutta)

RADHIKA RAO, EXECUTIVE DIRECTOR AND SENIOR ECONOMIST, DBS BANK

The RBI delivered on most fronts on Friday, lowering rates as per our expectations and taking pro-liquidity steps, as well as measures to prevent a re-hardening in borrowing costs. The policy decision was likely dictated by a higher weightage given to below-target inflation, which had provided a sizeable real rate buffer. Backing the move, inflation forecasts were lowered, while growth numbers were marked-to-market given the strong 1HFY26 (Apr-Sept) momentum. Policy guidance was also constructive, which is likely to be received positively by the onshore markets. The committee typically refrains from providing directional cues on the currency, instead emphasising a preference to minimise volatility and discourage one-sided speculative bets. 

(Janwee Prajapati)

FUND MANAGERS

DEEPAK AGRAWAL, CIO-DEBT, KOTAK MAHINDRA AMC

The RBI finally decided to hook and has gone all in with repo rate cut of 25 basis points, OMO purchases of bonds worth INR 1 trillion for December 2025 and FX swaps worth $5 billion and benign inflation projections.

RBI has utilised policy space which had opened due to falling inflation and has cut rates by 25 bps to ensure growth trajectory continues. The decision was unanimous. The MPC stance remained neutral. Inflation projection for Apr-Sept FY27 has been reduced to 3.95%. Growth projections for Apr-Sept FY27 have been pegged at 6.75%.

RBI has also assured ample durable liquidity for future as and when needed. We believe post this policy RBI to be in long pause. Market has given thumbs up to the policy and consequently the 10-year G-sec has moved lower by 3 bps and is trading around 6.48%. 

(Priyasmita Dutta)

NILESH SHAH, MD, KOTAK MAHINDRA AMC

The RBI has kept a pro-growth stance with a 25-bps repo rate cut, meeting the expectations of a half-divided market. To convince the other half of the market, OMOs (open market operation) will have to more than announced and also cover long end of the curve. The communication from the RBI beyond policy will be critical to keep yields to reflect rate cut. 

(Gopika Balasubramanium)

OTHERS 

APURVA SHETH, HEAD OF MARKET PERSPECTIVES AND RESEARCH, SAMCO SECURITIES

The Reserve Bank of India delivered a 25 basis points rate cut, bringing policy rates to their lowest level since July 2022. The move was widely anticipated as real interest rates had climbed to decadal highs. Even after today's cut, real rates hover near 5%, which is far too restrictive for an economy that needs healthy nominal growth to sustain earnings, tax collections, and debt dynamics. Inflation has been tamed, growth remains resilient. Monetary policy has space to support the next leg of expansion. With real rates still deeply positive, RBI retains ample room for further easing if conditions remain supportive. 

A weaker currency is the main cause of concern for the RBI. Right after the cut, we saw the rupee give some of its gains in the last two days. Further rate cuts will push the rupee even lower until foreign investors come back in a big way. Currency and growth are the two major factors RBI needs to balance now after benign inflation.
(Gopika Balasubramanium)

TRIBHUWAN ADHIKARI, MD & CEO, LIC HOUSING FINANCE

After maintaining a neutral stance at the last two Monetary Policy Committee meetings, a 25-basis points rate cut is on the expected lines, making a total of 125 bps repo rate cut this calendar year. The new 5.25% repo rate is a welcome move and would provide further relief to home buyers.

Friday, MPC raised the GDP growth projection for FY26 to 7.3%, higher than the earlier estimate of 6.8% which is positive for housing demand and home-buying sentiment due to stronger income and job visibility in the coming year. We anticipate a positive growth in the affordable and mid-segment housing in the upcoming quarters contributing to an overall healthy pick-up in consumer sentiment. 

(Priyasmita Dutta)

SHAILESH CHANDRA, PRESIDENT, SIAM

A 25 basis points rate cut announced Friday by the Reserve Bank of India, along with earlier repo rate reductions, reinforces a supportive monetary environment for boosting consumer sentiment in the country. Coupled with the income-tax relief, measures announced in the Union Budget 2025-26, and the landmark Goods and Services Tax 2.0 reforms, they are strong enablers for further enhancing affordability and accessibility. The Society of Indian Automobile Manufacturers remains optimistic that this alignment of monetary and fiscal measures will further accelerate growth of the Indian auto industry. 

(Narayana Krishna)

SACHIN BAJAJ, EXECUTIVE VICE-PRESIDENT AND CIO, AXIS MAX LIFE INSURANCE

Beyond the rate cut, RBI's decision to purchase government bonds worth up to INR 1 lakh crore (INR 1 trillion) through open market operations, combined with a $5 billion buy-sell swap, marks a decisive effort to restore durable liquidity and stabilise currency markets after the rupee's sharp depreciation. Through this dovish stance, RBI has struck a balanced policy that eases borrowing costs while shoring up financial conditions. With inflation at a multi-year low, there remains ample scope for further monetary support. We continue to see room for an additional 25 basis-point repo-rate cut, potentially taking the rate to 5%, later this financial year, emanating from uncertain global environment and tariffs. 

(Anjana Therese Antony)

SADAF SAYEED, CEO, MUTHOOT MICROFIN

The 25 bps policy rate cut is a prudent and positive step by the RBI. The additional liquidity infusion of INR 1 trillion through OMOs (open market operations) is equally significant, providing a strong growth-oriented push. This combination will enhance credit flow to the last mile, easing EMIs (equated monthly instalment) for customers and improving access to credit as liquidity transmission strengthens from banks to MFIs (microfinance institutions). 

(Anjana Therese Antony)

ANUJ PURI, CHAIRMAN, ANAROCK PROPERTY CONSULTANTS

The RBI's decision to cut the repo rate by 25 basis points is a distinct positive for the Indian real estate sector as we close 2025. Coming on the back of earlier easing cycles this year, this move further sweetens the value proposition for homebuyers, particularly in the affordable and mid-income segments, which are highly sensitive to interest rate fluctuations. With average housing prices across the top seven cities having risen by double digits in 2025, this rate cut provides a critical cushion to affordability, potentially bringing home loan interest rates to more attractive levels. This can encourage aspiring homebuyers who had paused their decisions due to price hikes to finally take the plunge. The rate cut is a distinct sentiment multiplier for year-end sales. However, the real impact hinges on the effective transmission of these benefits. If banks swiftly pass on this rate cut to borrowers, we anticipate a renewed surge in sales velocity carrying firmly into the first quarter of 2026. 

(Narayana Krishna)

AAMAR DEO SINGH, SENIOR VICE PRESIDENT – RESEARCH, ANGEL ONE LTD

The Reserve Bank of India's Monetary Policy Committee has unanimously decided to lower the repo rate by 25 basis points to 5.25% while keeping its policy stance neutral. RBI Governor characterised the economic landscape as an uncommon "goldilocks" phase, marked by impressive 8% GDP growth and subdued inflation at 2.2% during the year's first half. This move is bolstered by solid domestic factors, including sustained rural spending, gradual urban demand rebound, and vigorous investment, fuelled by rising non-food bank lending and elevated capacity usage. In line with these trends, the RBI has revised its FY26 real GDP growth projection upward to 7.3% from 6.8% earlier and trimmed the CPI inflation outlook to 2.0% from 2.6% earlier. The cut is designed to sustain this favourable momentum by easing borrowing costs in tandem with easing inflation pressures. Sectors sensitive to interest rates--banking, non-banking financial companies, automobiles, and real estate--are poised for positive gains. 

(Gopika Balasubramaium)

VISHAL GOENKA, CO-FOUNDER, INDIABONDS.COM

Given the recent inflation prints and the lack of transmission of lower interest rates in the banking sector, the RBI repo rate cut by 25 bps is timely. Interestingly, the forward expectations of inflation have come much lower, opening the door for another rate cut if required before the end of the financial year. The idea is to make funding cheaper for governments and corporates, and the Rs. 1 lakh crore (INR 1 trillion) OMO (open market operation) purchases announcement should assist in boosting liquidity and flattening the yield curve. Following this, investors should look to lock in current high rates from corporates in the two-three year segment and complement this by buying long-end government bonds for potential gains. 

(Anjana Therese Antony)

V.K. VIJAYAKUMAR, CHIEF INVESTMENT STRATEGIST, GEOJIT INVESTMENTS LTD

The MPC (Monetary Policy Committee) decided to vote in favour of growth despite ongoing robust growth in the economy. The unanimous nature of the decision in cutting rates by 25 bp (basis points) reflects the consensus in the MPC that giving further boost to growth is a risk worth taking even in the context of depreciating rupee.

The projection of 7.3% GDP growth for FY26 is positive for the market. Banks will like the policy decision overall but are unlikely to respond very positively to the rate cut since their NIMs (net interest margins) will come under pressure and they will face difficulties in mobilising deposits if deposit rates are lowered. However, rate sensitives like autos and real estate stand to gain from the rate cut. 

(Anjana Therese Antony)

JIGAR TRIVEDI, SENIOR RESEARCH ANALYST, RELIANCE SECURITIES

The Reserve Bank of India lowered its key repo rate by 25 basis points to 5.25% during its December 2025 meeting and maintained a neutral stance, in line with market expectations. The decision comes amid easing inflation and robust GDP growth, despite a weakening rupee. The central bank has now cut rates by a total of 125 bps since the beginning of the year, bringing the repo rate to its lowest level since July 2022. On the economic outlook, the RBI raised its GDP growth forecast for FY26 to 7.3%, up from a previous estimate of 6.8%, with Q3 at 7.0%, Q4 at 6.5%. Meanwhile, headline inflation projections were revised down to 2.0% from 2.6%, keeping it well within the central bank's 2–6% target range. 

(Anjana Therese Antony)

End

Compiled by Vinodini Yadav

Filed by Avishek Dutta

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