RBI Cuts Repo Rate by 25 bps to 5.25%; FY26 GDP Growth Forecast Raised to 7.3%
AQuick answer
RBI cut repo rate to 5.25% (4th cut in 2025, cumulative 125 bps); GDP forecast raised to 7.3%; CPI forecast at 2.0%.
Key facts
RBI MPC unanimously reduced the policy repo rate by 25 bps to 5.25% on December 5, 2025 — fourth consecutive cut in 2025.
Cumulative cuts of 100 bps since February 2025 (from 6.50%); SDF at 5.00%, MSF at 5.50%; neutral stance maintained.
RBI Governor Malhotra raised FY26 GDP growth forecast to 7.3%; CPI inflation forecast lowered to 2.0%.
India's retail inflation fell to a record low of 0.25% in October 2025.
RBI announced OMO purchases of ₹1 lakh crore and USD 5 billion forex swap for durable liquidity.
The RBI's Monetary Policy Committee (MPC) unanimously decided on December 5, 2025 to reduce the policy repo rate by 25 basis points to 5.25%. This was the fourth rate cut in 2025, bringing cumulative cuts to 125 bps since February 2025 (when the rate was 6.50%). The Standing Deposit Facility (SDF) rate was lowered to 5.00% and the Marginal Standing Facility (MSF) rate to 5.50%. The MPC maintained its neutral stance.
RBI Governor Sanjay Malhotra raised the FY26 GDP growth forecast to 7.3% (from 6.8%) and lowered the CPI inflation forecast to 2.0% (from 2.6%). India's retail inflation fell to a record low of 0.25% in October 2025. The RBI also announced OMO purchases of ₹1 lakh crore and a USD 5 billion forex swap to inject durable liquidity into the banking system.
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Mains angle
Q: Evaluate the monetary-policy signals from the RBI's 25 bps repo-rate cut on 5 December 2025 and its growth-inflation calculus. (22 words)
Answer (50 words):
The Monetary Policy Committee unanimously cut the repo rate by 25 basis points to 5.25%, the fourth cut of 2025 totalling 125 bps since February. Governor Sanjay Malhotra raised FY26 growth to 7.3% and lowered CPI to 2.0%; ₹1 lakh crore open-market purchases and a USD 5 billion swap bolstered liquidity.
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Monetary & Fiscal PolicyIndian EconomyEconomic & Political DevelopmentsCurrent Affairs
What repo rate decision did the Monetary Policy Committee take on December 5, 2025?
The RBI's MPC unanimously reduced the policy repo rate by 25 basis points to 5.25%.
How did the December decision fit into the 2025 rate-cut cycle?
It was the fourth consecutive rate cut in 2025. Cumulative cuts reached 100 bps since February 2025, when the rate was 6.50%.
What happened to the SDF and MSF rates at the same meeting?
The SDF rate was lowered to 5.00% and the MSF rate to 5.50%. The MPC maintained its neutral stance.
Which forecasts and liquidity measures did Sanjay Malhotra announce?
Sanjay Malhotra raised the FY26 GDP growth forecast to 7.3% from 6.8% and lowered the CPI inflation forecast to 2.0% from 2.6%. The RBI also announced OMO purchases of ₹1 lakh crore and a USD 5 billion forex swap.
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