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RBI Cuts Repo Rate to 5.25%: MPC Delivers 25 bps Reduction, Announces ₹1 Lakh Crore OMO
The Reserve Bank of India (RBI) on Thursday lowered the key lending rate by 25 basis points, bringing the repo rate down to 5.25%. With this move, the total rate reduction in 2025 now stands at 125 basis points, as the central bank aims to support economic activity amid cooling inflation and steady growth indicators.
The announcement came after the Monetary Policy Committee (MPC) met from December 3 to 5 to review the economic outlook. Alongside the repo rate cut, the RBI revised the Standing Deposit Facility (SDF) rate to 5%, and the Marginal Standing Facility (MSF) rate and bank rate to 5.5%, while retaining its neutral stance.
RBI Governor Sanjay Malhotra said the MPC unanimously voted for the rate cut, citing an improved inflation trajectory and a favourable policy environment.
To ensure liquidity remains stable in financial markets, the RBI also announced:
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₹1 lakh crore in OMO purchases of government securities
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A $5 billion, three-year dollar–rupee buy-sell swap
These steps aim to inject durable liquidity into the banking system.
Malhotra noted that inflation has eased significantly and is expected to remain around or below 4% during the first half of next year. While precious metal prices added nearly 50 basis points to the headline inflation number, underlying price pressures remain soft.
On growth, the RBI indicated that the economy continues to show resilience, though a mild moderation is expected. With inflation well within the target range, the central bank believes it now has adequate policy room to reinforce the growth momentum.
The rate cut comes after a year of improving macroeconomic conditions, with inflation falling to multi-year lows and GDP growth remaining robust.
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Published: Dec 05, 2025
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