RBI Slashes Key Rate by 25 Basis Points to 5.25% Amid Strong GDP and Low Inflation
Rate reduction aims to boost liquidity as economy posts robust Q2 growth and retail inflation hits 0.25%
Mumbai, Dec 5: The Reserve Bank of India (RBI) on Friday announced a 25 basis points reduction in the policy repo rate, bringing it down to 5.25%. The decision was communicated by RBI Governor Sanjay Malhotra following the three day Monetary Policy Committee (MPC) meeting held from December 3 to 5.
Governor Malhotra said the MPC conducted a thorough assessment of the evolving macroeconomic conditions and outlook before unanimously deciding to implement the rate cut with immediate effect.
“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,” the Governor stated.
Strong economic fundamentals and low inflation drive decision
The move comes in the backdrop of robust GDP growth of 8.2% in Q2 of the current financial year and historically low inflation. Retail inflation in India fell sharply to 0.25% in October 2025, according to the Ministry of Statistics and Programme Implementation (MoSPI), marking a record low for the period.
This follows the RBI’s previous policy review on October 1, when the repo rate was maintained at 5.5%. The MPC had then unanimously decided to hold rates unchanged after assessing domestic and global economic conditions.
The rate cut is expected to provide additional liquidity support to the economy, reinforcing growth momentum while maintaining price stability, officials said.
