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RBI cuts Repo Rate by 25 basis points to 5.25%

India's GDP growth exceeded the RBI's expectations in both the June and September quarters. In the July-September quarter (Q2) of FY26, India's GDP grew by 8.2 percent, following a 7.8 percent rise in the June quarter.

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RBI cuts Repo Rate by 25 basis points to 5.25%
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The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) on Friday decided to lower the repo rate by 25 basis points, bringing it down to 5.25 percent immediately. RBI Governor Sanjay Malhotra announced the decision, and the MPC maintained its neutral stance.

Analysts noted that the December policy decision was a close call between a cut and a pause, considering the strong growth and low inflation.

India's GDP growth exceeded the RBI's expectations in both the June and September quarters. In the July-September quarter (Q2) of FY26, India's GDP grew by 8.2 percent, following a 7.8 percent rise in the June quarter.

Even the retail inflation, measured by the Consumer Price Index (CPI), cooled to 0.25 percent in October due to record-low food prices and the impact of the recent Goods and Services Tax (GST) cuts, which eased prices across several sectors, according to a Business Standard report.

During its October meeting, the MPC decided to keep the repo rate at 5.5 percent, following three consecutive cuts since February, totaling 100 basis points. One basis point equals one-hundredth of a percentage point. These cuts reduced the repo rate from 6.5 per cent in February. The repo rate is the interest rate at which the RBI provides loans to commercial banks.

The central bank also adjusted its growth forecast for FY26, increasing it to 6.8 percent, while decreasing the inflation forecast to 2.6 percent. In its October meeting, the rate-setting body maintained its neutral stance.

 

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