Archive · 16 Dec 2025
RBI Cuts Repo Rate to 5.25%
The Reserve Bank of India (RBI) has lowered the repo rate to 5.25% because inflation has been decreasing.
This means banks are also reducing their interest rates on savings like fixed deposits (FDs).
For people who pay little or no taxes, bank FDs are a good option for short-term savings.
For long-term goals like retirement, products like the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) offer good returns and tax benefits.
Debt funds and other tax-efficient funds are better for those in higher tax brackets.
The article suggests different savings options based on your tax bracket and how long you plan to save.
The RBI cut the repo rate to 5.25% on 5 December 2025 due to easing inflation.
Banks have reduced deposit rates on 1- to 3-year FDs by 15bps to 125bps.
Interest rates on small savings schemes like PPF and SSY remain unchanged since January 2024.
Bank FDs are suitable for short-term savings, especially for low-tax bracket individuals.
Debt funds and income plus arbitrage FoFs are tax-efficient options for higher tax brackets.
- Who
- Reserve Bank of India (RBI)
- What
- Cut the repo rate by 25 basis points to 5.25%
- When
- 5 December 2025
- Where
- India
- Why
- Significant easing in inflation and softer than projected expectations
- Repo Rate
- 5.25%
- Inflation Easing
- Yes
- Bank FD Rates (1-2 years)
- 6.15-6.70% p.a.
- Bank FD Rates (2-3 years)
- 5.9-6.5% p.a.
- PPF Interest Rate
- 7.1% p.a.
- Sukanya Samriddhi Yojana Rate
- 8.2% p.a.
- Senior Citizen Savings Scheme Rate
- 8.2% p.a.
- Liquid Funds Average Return (1 year)
- 6.22%
- Ultra-Short Duration Funds Average Return (1 year)
- 6.71%
- Short-Duration Funds Average Return (1 year)
- 7.30%
- Short-Duration Funds Average Return (3 years)
- 7.15%
