The RBI has cut its key policy rate by 25 basis points, bringing the repo rate down to 5.25% from 5.50%, as announced by Governor Sanjay Malhotra. This decision marks a return to easing after a brief pause in rate changes over the last two policy sessions.
Since February, the MPC has implemented three successive rate cuts totaling 100 basis points, reducing the repo rate from 6.5 percent to 5.5 percent by June. For context, one basis point equals 0.01 percentage point.
its December 3–5 policy meeting, the committee kept its stance unchanged at ‘neutral’. The SDF rate was revised to 5.00 percent, while both the MSF rate and the bank rate were set at 5.50 percent.
According to the RBI Governor, global uncertainty continues to weigh on economic risks, yet the successful completion of several ongoing trade and investment talks with other countries could strengthen India’s growth prospects. “External uncertainties pose downside risks, but faster progress on trade and investment negotiations with multiple jurisdictions could deliver meaningful upside,” Malhotra said.
