On 5-12-2025, the Reserve Bank of India (‘RBI’) announced the outcome of its 58th Monetary Policy Committee (‘MPC’) meeting, held from 3-12-2025 to 5-12-2025, through its Monetary Policy Statement for 2025-26.
The MPC announced the new repo rate as 5.25 per cent, effective from 5-12-2025.
Key Highlights:
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In a meeting led by the Governor of RBI, Mr. Sanjay Malhotra, the MPC unanimously voted to reduce the policy repo rate by 25 basis points to 5.25% under the Liquidity Adjustment Facility (LAF).
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The Standing Deposit Facility (SDF) rate is now 5.00%, while the Marginal Standing Facility (MSF) rate and Bank Rate have been adjusted to 5.50%.
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The MPC decided to continue with a neutral stance, signalling flexibility to respond to evolving economic conditions.
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The MPC highlighted that Real GDP growth surged to 8.2% in Q2:2025-26, the highest in six quarters, supported by robust domestic demand. And on the supply side, GVA expanded by 8.1%, aided by buoyant industrial and services sectors. Key drivers included GST rationalisation, softer crude oil prices, front-loaded government capital expenditure, and benign inflation.
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The MPC noted that headline inflation has eased significantly and is likely to remain softer than earlier projections. Core inflation is expected to stay anchored, while growth remains resilient though slightly moderating.
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The minutes of the MPC meeting will be published on 19-12-2025, ensuring transparency.
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The MPC will closely monitor economic conditions before deciding future policy adjustments. The next MPC meeting is scheduled from 4-2-2026 to 6-2-2026.
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This repo rate cut will lower borrowing costs for consumers and businesses, supporting investment and consumption.