Archive · 6 Dec 2025
RBI Cuts Repo Rate, Boosts Liquidity
The Reserve Bank of India (RBI) decided to lower the repo rate, which is the interest rate at which banks borrow money from the RBI, by 0.25%.
This means that loans will become cheaper for people and businesses, which can help the economy grow.
The RBI also announced that it will add more money into the banking system through special operations to make sure there is enough liquidity.
They did this because the economy has been facing some challenges, like high tariffs from the US, but inflation is low, so it's a good time to support growth.
The RBI also said they will buy government bonds and do a special currency swap to help with this.
Some people think this is a good move, while others think it might be too early.
The RBI is confident that these steps will help the economy without causing problems.
The RBI cut the repo rate by 25 basis points to 5.25% to support economic growth.
The central bank announced ₹1.5 lakh crore in liquidity measures, including ₹1 lakh crore in OMO purchases and a $5 billion forex swap.
Inflation is projected to be 2% for the fiscal year, while GDP growth is expected to be 7.3%.
The RBI will conduct OMO purchase auctions on December 11 and 18, and a forex swap auction on December 16.
Economists are divided on whether the RBI's dovish stance is appropriate given potential risks and the need for further assessment of economic conditions.
- Who
- Reserve Bank of India (RBI) and its Monetary Policy Committee (MPC)
- What
- Cut the repo rate by 25 basis points and announced liquidity measures including OMO purchases and a forex swap
- When
- December 5, 2025
- Where
- India
- Why
- To support economic growth amid benign inflation and potential external headwinds
Pro-Growth Stance
Cautious Approach
Rate Cut Timing
Pro-Growth Stance
The rate cut is timely to support economic growth amid benign inflation and potential external headwinds.
Cautious Approach
Some economists believe the rate cut might be premature given potential risks and the need for further assessment of economic conditions.
Liquidity Measures
Pro-Growth Stance
The liquidity measures, including OMO purchases and forex swaps, are adequate and will support the economy effectively.
Cautious Approach
Some market participants expected larger OMO purchases and are disappointed with the announced amount.
- Repo Rate Cut
- 25 basis points to 5.25%
- Liquidity Boost
- ₹1.5 lakh crore through OMO purchases and forex swaps
- Inflation Forecast
- 2% for the fiscal year
- GDP Growth Projection
- 7.3% for FY26
- H1:2025-26 Growth
- 8.0%
- H1:2025-26 Inflation
- 2.2%
- OMO Purchase Dates
- December 11 and 18, 2025
- Forex Swap Date
- December 16, 2025
- Total Repo Rate Cuts in 2025
- 125 basis points
- System Liquidity
- ₹2.66 lakh crore as of December 4, 2025
- 10-Year G-Sec Yield
- 6.49% as of December 5, 2025
- Credit-Deposit Ratio
- 80.21% as of October 21, 2025
Sources
Focus now on policy rate cut transmission: RBI Governor
RBI MPC announces liquidity measures, OMO purchases & USD/INR swap
Goldilocks or overreach? Economists split on RBI’s dovish messaging
Home, auto loans to get cheaper as RBI cuts interest rates to support 'goldilocks' economy
MPC cuts repo rate by 25 bps to a 3-year low
RBI not in favour of runaway credit growth, says real interest rates still “quite high”
RBI flags ‘goldilocks’ moment, lowers CPI view to 2%, lifts growth outlook
RBI’s repo cut to aid consumption, investment and funding cost, bankers say
Rupee Fall Not a Worry, Says RBI Governor Malhotra
RBI’s New Year Gift To Borrowers, Cuts Lending Rate By 25 bps
India’s GDP to grow 7% in Q3 and Q4, full-year outlook at 7.6%: SBI Research
Bond yields reverse early gains on profit booking
Letters to Editor
Rupee: RBI’s effort has always been to reduce any abnormal or excessive volatility, says Guv Malhotra
RBI Plans Rs 1 Lakh Crore OMO Purchases, $5 Billion USD/INR Swap to Ease Liquidity in December
RBI’s liquidity measures to provide short-term relief
MPC has rightly focused on growth over exchange rate
Deposit rates may stay put despite repo rate cut, say bankers
ICRA expects extended policy rate pause, unless economic growth moderates
Repo Rate Slashed to 5.25 percent; Softer Rate Cycle Reignites Demand Across Real Estate Sector
