RBI's MPC delivers again, takes 2025 rate cut tally to 125 bps

Repo rate cut by 25 bps, stance still neutral; liquidity boost via ₹1 trn OMO in Dec

- MANOJIT SAHA

With the conviction that headline inflation will stay benign for the next six to nine months, the six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to lower the policy repo rate by another 25 basis points (bps) to 5.25 per cent on Friday, the lowest in over three years.

Lending rates for retail home loans and car loans which are linked to external benchmarks like the repo rate, will be adjusted immediately. One basis point equals 0.01 per cent. Moreover, with an eye on transmission of policy rates to lending and deposit rates, the central bank announced ₹1 trillion of fund infusion by open market operation and a 3-year USD/₹ Buy Sell swap of $5 billion - both to be conducted in December, so that liquidity with banks remains ample.

The mild inflation trends along with the 8 per cent growth recorded by the economy in the first half of 2025-26 (FY26) present a “rare Goldilocks period” for India, said RBI Governor Sanjay Malhotra.

The MPC which Malhotra chairs - has lowered the policy repo rate by 125 bps in 2025.