RAS question
To what level did the RBI cut the repo rate in its December 2025 MPC meeting?
Correct answer: (A) 5.25%.
In its December 2025 Monetary Policy Committee meeting, the RBI cut the repo rate by 25 basis points to 5.25%.
Explanation
The RBI's Monetary Policy Committee met from 3 to 5 December 2025 and reduced the policy repo rate by 25 basis points, taking it to 5.25%. The move mattered because it was not an isolated trim: PIB notes that the RBI's MPC cumulatively reduced the repo rate by 100 basis points between April and December 2025, leaving it at 5.25%. This was the fourth consecutive cut of 2025, alongside a raised FY26 GDP forecast of 7.3% and a CPI inflation projection of 2.0%. Among the options, only 5.25% is the post-meeting repo-rate level.
Why the other options are wrong
- (B) 5.50% would be 25 basis points above the stated post-meeting repo rate, so it does not reflect the December 2025 cut.
- (C) 6.00% is too high because the question asks for the level after the MPC's December 2025 reduction, not an earlier or unreduced rate.
- (D) 6.25% is inconsistent with both the 25-basis-point December cut and the PIB-supported final level of 5.25%.
Concept
This tests monetary policy, especially the policy repo rate set by the RBI's MPC. It recurs in RAS because rate decisions link inflation, credit conditions and growth signals in the Indian economy.