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RBI MPC Meeting 2025: Governor Sanjay Malhotra-led panel reduces repo rate to 5.25%

RBI Monetary Policy Meeting December 2025 | RBI Repo Rate Today: Following a three-day meeting of the Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, the RBI released the updated rates for the banking sector.

3 min readNew DelhiUpdated: Dec 5, 2025 10:54 AM IST

RBI Governor Sanjay Malhotra (File Photo/Ganesh Shirsekar)

RBI MPC Meeting December 2025 Announcements: The Reserve Bank of India (RBI) on Friday reduced the repo rate by 25 basis points to 5.25 %, keeping its stance neutral.

Following a three-day meeting of the Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, the RBI released the updated rates for the banking sector.

The Standing Deposit Facility (SDF) rate, under the LAF (Liquidity Adjustment Facility), has been set at 5.00 % and the Marginal Standing Facility (MSF) rate at 5.50 %. These rates will guide liquidity conditions in the financial system till the next meeting.

The central bank also provided its revised macroeconomic outlook, raising the real GDP growth forecast to 7.3 % for FY26, compared to 6.8% projected in the last meeting in October. “This is up by about half a per cent from our earlier projections. Q3 is projected at 7% and Q4 at 6.5%. Real GDP growth for Q1 next year is projected at 6.7% and Q2 next year at 6.8%,” Malhotra said.

The CPI inflation projection has been lowered to 2 %, down from 2.6 % since the October review.

Since the October policy, the Indian economy has witnessed “rapid disinflation,” with inflation dipping to a mere 0.3% in October 2025. Real GDP growth accelerated to 8.2% in Q2, aided by strong festive spending and rationalisation of GST rates, he said.

“Inflation at a benign 2.2% and growth at 8% for the first half of the year presents a rare Goldilocks period,” Malhotra added.

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“The 125-basis-point cut so far this year has already pushed home loan rates lower, making borrowing more affordable for new buyers. For a ₹50-lakh loan over 20 years, this translates into a materially lower lifetime interest outflow and improved affordability for new borrowers. For existing borrowers, a declining-rate cycle is an opportunity to restructure,” Malhotra said.

“Retaining the same EMI and allowing the rate cut to reduce the tenure sharply accelerates savings. Even a small EMI increase can further shorten the loan horizon and free up liquidity. Since the home loan is usually the largest household liability, this window should be used to bring down debt faster and strengthen long-term balance sheets,” he added.

India’s forex reserve stands “healthy” at $686 billion, providing cover of import for up to 11 months. Malhotra informed that merchandise exports contracted year-on-year in October 2025 while imports rose for the second straight month, widening the trade deficit. He further noted that services exports will remain strong, while merchandise export may face headwinds.

What were the figures in the last meeting?

In October, the central bank had kept the repo rate unchanged at 5.5 percent with a neutral stance. Cash Reserve Ratio (CRR) stood at 3%, Standing Deposit Facility (SDF) rate at 5.25% Marginal Standing Facility (MSF) at 5.75%, and Bank Rate at 5.75%.