RBI cuts repo rate to 5.25% as inflation eases and GDP outlook strengthens

Along with the repo rate cut, the MPC adjusted the Standing Deposit Facility (SDF) to 5% and the Marginal Standing Facility (MSF) to 5.5%

PGurus Newsdesk

December 5, 2025

RBI 2025 Review: Strong Growth, Low Inflation

Governor Sanjay Malhotra Announces Relief for borrowers

The Reserve Bank of India (RBI) on Thursday announced a 25 basis-point cut in the repo rate, bringing it down from 5.5% to 5.25%, Governor Sanjay Malhotra said while unveiling the latest monetary policy.

The rate cut was unanimously approved by the RBI’s Monetary Policy Committee (MPC) after a three-day review meeting, held every two months to shape India’s monetary strategy. The committee weighed record-low inflation against a sliding rupee, which touched a new low yesterday.

This is the second rate cut of the year — the MPC had earlier reduced the repo rate from 6% to 5.5% in June, citing easing inflationary pressures. The latest move is expected to bring relief to retail borrowers as lenders may reduce home loan and personal loan EMIs.

RBI 2025 Review: Strong Growth, Low Inflation

Governor Malhotra said that 2025 recorded strong economic growth and benign inflation, despite persistent geopolitical and global trade uncertainties. The central bank will continue with a neutral stance, he added, entering the new year “with hope, vigour and determination.”

Inflation Outlook and GDP Projections

The RBI expects retail inflation to remain softer than earlier estimates. Underlying inflationary pressures are now significantly lower.

CPI inflation forecast for FY2025–26: Revised down to 2%
India’s GDP growth forecast for FY2025–26: Upgraded to 7.3% from the previous 6.8%
Q3 GDP projection (Oct–Dec): Raised to 6.7% from 6.4%

Malhotra noted that the growth–inflation balance continues to offer policy room for supportive economic measures.