Archive · 6 Dec 2025
RBI Cuts Repo Rate, Boosts Growth Forecast
The Reserve Bank of India (RBI) decided to lower the repo rate, which is the rate at which banks borrow money from the RBI, by 0.25%.
This means banks might also lower the interest rates they charge for home loans.
The RBI also said they think prices for things will go up less next year and that the economy will grow faster.
The RBI governor called this a 'rare goldilocks period' because the economy is growing strongly while prices are staying low.
The RBI also said they will buy government bonds and do a special money exchange to help banks have more money to lend.
Experts think this is a good time to invest in short-term bonds because they are safer and can give good returns.
The RBI governor also said the country's current account deficit will stay below 2% of GDP, and the rupee's value will be decided by market forces.
RBI cut the repo rate by 25 basis points to 5.25%, urging banks to lower lending rates on home loans.
The RBI revised its average CPI inflation forecast for FY26 to 2.0% from 2.6% and upgraded its GDP growth estimate to 7.3%.
Q2 FY26 GDP growth was 8.2%, the strongest in six quarters, driven by industrial and services activity.
The RBI announced open market purchases of government bonds and a $5 billion buy-sell forex swap to add liquidity.
RBI Governor Sanjay Malhotra characterized the current economic period as a 'rare goldilocks period' with high growth and low inflation.
- Who
- Reserve Bank of India (RBI)
- What
- Cut repo rate by 25 basis points to 5.25%, revised growth and inflation forecasts
- When
- Friday, December 5, 2025
- Where
- India
- Why
- To support economic growth and manage inflation
- Repo Rate Cut
- 25 basis points
- New Repo Rate
- 5.25%
- Inflation Forecast (FY26)
- 2.0%
- GDP Growth Forecast (FY26)
- 7.3%
- Q2 FY26 GDP Growth
- 8.2%
- Q2 FY26 CPI Inflation
- 1.7%
- Current Account Deficit (Q2 FY26)
- 1.3% of GDP
Sources
Bajaj Finance surges 1.72% as Housing Finance unit hits low despite RBI rate cut
RBI cuts rates: Edelweiss AMC says short duration debt funds offer best value now\
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RBI lifts FY26 growth forecast to 7.3%, pegs inflation at just 2% - Telegraph India
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Sanjay Malhotra expects current-account deficit under 2 per cent of GDP this fiscal - Telegraph India
RBI cuts repo rate to 5.25%: Banks move swiftly to trim lending rates; details here
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Rate-sensitive stocks advance
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Punjab National Bank cuts home loan rate to 8.10% after RBI repo rate cut
Why did RBI Governor say India’s economy is in ‘rare Goldilocks period’? – A detailed analysis
