RBI Cuts Repo Rate to 5.25%; Raises FY26 GDP Forecast to 7.3%
The RBI has reduced the repo rate by 25 basis points to 5.25%; inflation outlook softens as OMO purchases and a $5 billion FX swap are announced
Dec 5, 2025 - The Reserve Bank of India (RBI) on Friday (December 5) announced a cut in the benchmark Repo Rate by 25 basis points (bps) from 5.5% to 5.25% against a plunging rupee and has kept its stance Neutral. Governor of the Central Bank Sanjay Malhotra informed this unanimous decision of the three-day RBI Monetary Committee meeting which is held every two months.
A cut in Repo Rate by 25 bps indicates a reduction in loan EMIs for retail borrowers.
The RBI has raised the GDP (gross domestic product) forecast for the current Financial Year to 7.3% from its earlier estimate of 6.8%. The GDP forecast for the current quarter (Q3, October-December) has also been raised to 6.7% versus the earlier 6.4%.
India’s inflation rate has been pegged at 2% in FY26 versus 2.6% earlier. The Standing Deposit Facility (SDF) has been adjusted to 5% and Marginal Standing Facility (MSF) to 5.5%. Additionally, RBI has announced decision to conduct Rs 1 lakh crore OMO purchases in the near-term and conduct $5 billion dollar-rupee swap in December.
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