Door open for more rate cuts

REPO RATE REDUCED BY 25 BPS; LIQUIDITY GETS A₹1.45-LAKH-CR BOOST

- JOYDEEP GHOSH

IT WAS A googly that caught markets off guard. After the sharp slide in the rupee, speculation had mounted that the central bank was nearing the end of its rate-easing cycle.

But the six-member Monetary Policy Committee (MPC) had other ideas, voting unanimously on Friday to cut the repo rate by 25 basis points to 5.25%.

The MPC also left the door open for further easing, while announcing measures to inject up to ₹1.45 lakh crore of liquidity into the banking system. RBI Governor Sanjay Malhotra described the current phase as a “Goldilocks period” for the economy, with inflation at a benign 2.2% and growth at 8% in the first half of FY26.