Synopsis: The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points, bringing it down to 5.25%. The unanimous decision by the Monetary Policy Committee (MPC) is expected to boost liquidity, reduce borrowing costs, and support economic momentum amid strong GDP growth and record-low inflation.
RBI Cuts Repo Rate to 5.25% After MPC’s Unanimous Decision
The Reserve Bank of India (RBI) on Friday (December 3) announced a 25 basis point reduction in the policy repo rate, lowering it from 5.50% to 5.25%. The announcement was made by RBI Governor Sanjay Malhotra following the three-day Monetary Policy Committee (MPC) meeting held from December 3–5.
Governor Malhotra stated that the MPC conducted an extensive review of macroeconomic conditions and the future outlook before reaching a unanimous agreement.
He said:
“After a detailed assessment of the evolving macroeconomic conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 5.25 per cent, with immediate effect.”
Why the RBI Cut the Repo Rate?
The decision comes at a time when the Indian economy is displaying:
- Strong macroeconomic performance
- Robust GDP growth of 8.2% in Q2 FY2025
- Record-low retail inflation of 0.25% in October 2025 (MoSPI data)
With inflation cooling sharply and growth momentum staying high, the RBI opted for a calibrated easing to support liquidity and credit expansion.
Shift From Last Policy Review
The rate cut marks a change from the previous policy review on October 1, when the RBI kept the repo rate unchanged at 5.5%.
During that review, the MPC had also met for three days (Sept 29–Oct 1) and unanimously voted to maintain status quo.
With the latest decision, the RBI has now begun easing policy rates as inflation stabilises and growth remains healthy.
What the New Repo Rate Means for the Economy
- Lower borrowing costs for consumers and businesses
- Potential reduction in EMIs for home and auto loans
- Improved liquidity in the financial system
- Support for continued economic momentum
- Boost to credit growth and investment activities
The RBI noted that the fresh rate cut reinforces economic stability at a time when India’s macro indicators remain favourable.
📌 Key Takeaway
The RBI’s 25 bps repo rate cut to 5.25% marks a strategic move to support growth amid falling inflation and strong GDP numbers. The decision is expected to ease loan burdens, inject liquidity, and help sustain India’s resilient economic momentum.
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