Archive · 19 Dec 2025
RBI Cuts Rates Amid Low Inflation
The Reserve Bank of India (RBI) has decided to lower interest rates by a small amount because prices for things are not going up very much.
This is good news because it means the economy is growing well without causing too much inflation.
The RBI thinks this will help the economy grow even more.
At the same time, the price of gold went down a bit because the US dollar got stronger, but it is still higher than it was last week.
The price of silver also went up after a big drop the day before.
The RBI is being careful to make sure the economy stays stable and doesn't grow too fast, which could cause problems.
The country's GDP is expected to grow by more than 7% this year, which is higher than what was expected at the beginning of the year.
The RBI is also keeping an eye on other things like the price of pulses and the demand for electricity to make sure everything stays balanced.
RBI cuts policy rate by 25 basis points to stimulate demand and support growth.
India's GDP growth expected to exceed 7% for the year, higher than initially projected.
Inflation remains low, with headline inflation likely to be around 2% for 2025-26.
Core inflation has been between 2.5% and 3.4% since early 2024.
Gold prices dropped nearly ₹1,000 per 10g due to US dollar strength but are poised for a weekly gain.
- Who
- Reserve Bank of India (RBI) Monetary Policy Committee (MPC)
- What
- RBI cuts policy rate by 25 basis points amid low inflation and robust growth
- When
- Current year and projections for 2025-26
- Where
- Global and domestic economic conditions
- Why
- Due to favorable domestic factors and benign inflation
Neutral Stance Advocates
Accommodative Stance Advocates
Monetary Policy Stance
Neutral Stance Advocates
Retain a neutral stance to maintain flexibility and respond to evolving macroeconomic conditions.
Accommodative Stance Advocates
Shift to an accommodative stance to support growth momentum and address low inflation.
- Policy Rate Cut
- 25 basis points
- Repo Rate
- 5.25%
- Cumulative Rate Cuts in 2025
- 125 basis points
- Inflation Outlook
- Headline inflation likely to be around 2% for 2025-26
- Core Inflation
- Between 2.5% and 3.4% since early 2024
- GDP Growth Projection
- 7.3% for 2025-26
- Pulses Imports
- Likely to fall 45% in FY26 to 4 MT
- Power Demand Growth
- 1.5-2% in FY26
Sources
Global growth resilient despite risks; India GDP to top 7%: RBI MPC minutes
MPC’s December rate cut a ‘risk management’ move as low inflation, slack capacity ease overheating fears
Gold Rates Today: MCX gold drops nearly ₹1,000 per 10g as US dollar strengthens, but poised for weekly gain
Benign inflation outlook to provide policy the space to support growth momentum: MPC minutes
‘Real interest rates need to be lower’: Sanjay Malhotra
India’s sale of urea sales jumps 20%, but that of DAP drops during Dec 1-12
Power demand to rise 1.5-2% in FY26
RBI MPC Minutes: Considering benign inflation outlook real interest rates need to be lower, says Governor Sanjay Malhotra
Import of pulses likel to fall 45% in FY26 to 4 MT on robust stocks
RBI Gov Votes For Rate Cut On Benign Inflation, Risks To Growth
