The Reserve Bank of India on Friday (December 3) announced a 25 basis points reduction in the policy repo rate, bringing it down to 5.25 per cent. The decision was communicated by RBI Governor Sanjay Malhotra after the conclusion of the three-day Monetary Policy Committee (MPC) meeting held from December 3 to 5.

The governor stated that the MPC undertook a detailed assessment of evolving macroeconomic conditions and future outlook before arriving at the unanimous decision to implement the rate cut with immediate effect. Announcing the decision, the Governor said, "The MPC met on the 3rd, 4th, and 5th of December to deliberate and decide on the policy repo rate. 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." With the announcement today, the latest MPC meeting stands concluded.

ReserveBankOfIndia (@RBI) December 5, 2025

Economic Context for the Rate Cut

The rate cut follows a phase of strong macroeconomic performance supported by robust GDP growth of 8.2 per cent in the second quarter of the current financial year and low levels of inflation. India's retail inflation fell sharply to 0.25 per cent in October 2025, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI), marking a record low.

Shift from Previous Policy Stance

This marks a shift from the last monetary policy announcement on October 1, when the RBI maintained the repo rate at 5.5 per cent.

In that review as well, the MPC had unanimously decided to keep the policy rate unchanged after meeting on September 29 and 30 and October 1 to assess domestic and global economic conditions. At that time, the Governor had informed that the committee voted in favour of maintaining the rate at 5.5 per cent.

Expected Impact

The latest reduction is expected to provide liquidity support and reinforce momentum at a time when GDP numbers remain strong and inflation continues its downward trajectory.

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

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