RBI Cuts Repo Rate by 25 bps to 5.25%

The Reserve Bank of India cut its key repo rate by 25 basis points to 5.25 percent on December 5, 2025, in a unanimous decision by its six-member monetary policy committee, aiming to support economic growth amid low inflation and robust expansion.

The move, announced following a three-day meeting in Mumbai chaired by Governor Sanjay Malhotra, aligns with expectations from most economists and brings the total rate reductions to 125 basis points since February 2025. The committee maintained its neutral policy stance, signaling a cautious approach to future adjustments. Accompanying the rate cut, the RBI outlined liquidity measures, including open market operations to purchase one trillion rupees worth of bonds and five billion dollars in forex swaps, both set for December. These steps are intended to enhance liquidity in the banking system and facilitate quicker transmission of lower borrowing costs to the economy.

The decision reflects a favorable economic environment, with retail inflation hitting a record low of 0.25 percent in October and projected to remain subdued. The committee also revised its macroeconomic projections upward, raising the real GDP growth forecast for the...