RAS question
To what rate did the RBI's Monetary Policy Committee cut the repo rate in December 2025, after two consecutive MPC meetings had kept the rate unchanged?
Correct answer: (A) 5.25%.
In December 2025, the RBI's Monetary Policy Committee cut the policy repo rate by 25 basis points to 5.25%.
Explanation
The December 2025 MPC decision was a rate cut, not another pause. The PIB backgrounder states that, in the backdrop of evolving macroeconomic and financial developments, RBI reduced the policy repo rate by 25 basis points to 5.25% with a neutral stance. That matters because the previous cited monetary-policy release had kept the repo rate unchanged at 5.50%, so the December move marked a shift from pause to easing. RBI's updated macro view also tied into the cut: GDP growth for FY2025-26 was revised upwards to 7.3%, while CPI inflation was lowered to 2.0%. Together, these figures explain why 5.25% is the precise rate asked for.
Why the other options are wrong
- (B) 5.50% was the rate at which RBI had kept the repo rate unchanged in the earlier MPC context, not the reduced December 2025 rate.
- (C) 6.00% is above both the earlier unchanged 5.50% level and the December 2025 reduced rate of 5.25%, so it cannot be the post-cut repo rate.
- (D) 5.75% would not reflect the stated 25-basis-point cut from 5.50%; that cut takes the repo rate down to 5.25%.
Concept
This tests the Indian Economy syllabus area of monetary policy, especially the MPC's repo-rate decisions and their link with growth and inflation signals. RAS often asks such current-policy figures because they connect RBI decisions with macroeconomic interpretation, not just factual recall.