The Reserve Bank of India on Friday cut the policy repo rate by 25 basis points to 5.25%, marking the fourth reduction this year. RBI Governor Sanjay Malhotra said the Monetary Policy Committee (MPC) voted unanimously for the cut, noting that inflation has cooled sharply and economic growth remains strong.

The decision came at the MPC’s fifth bi-monthly meeting for FY26 held from December 3 to 5. Before today’s cut, the RBI had already lowered rates by 100 basis points since February.

Governor Malhotra said the economy has seen “rapid disinflation,” with headline inflation dropping to 0.3% in October 2025, the lowest on record. GDP growth rose to 8.2% in Q2, helped by festive spending and GST rate adjustments.

The central bank also kept its neutral stance, signalling neither tightening nor aggressive easing ahead.

To improve liquidity, the RBI announced:

  • ₹1 lakh crore government securities purchase through Open Market Operations (OMO)

  • A three-year dollar–rupee swap of USD 5 billion

These steps aim to ensure that banks have enough money to lend smoothly.

  • Real GDP growth for FY26 is now projected at 7.3%.

  • CPI inflation is expected at 2%, lower than earlier estimates.

  • Merchandise exports face global pressures, but services exports remain strong.

Before the announcement, markets opened lower:

  • Sensex slipped 139 points to 85,125

  • Nifty 50 fell 33 points to 25,999

Analysts had already predicted a 25 bps cut, calling it likely the “last one” in this rate-reduction cycle.

Binod Kumar, MD & CEO of Indian Bank, said the cut will support demand at a time when the rupee is weak.
“It will further bolster domestic demand against a weakening rupee… Retail customers and MSMEs can expect more affordable credit and greater confidence to plan ahead. Indian Bank is committed to rate transmission,” he said.

Developers and property firms widely welcomed the move, saying it will make home loans cheaper and boost buyer confidence.

Pradeep Aggarwal of Signature Global said the cut will “support the ongoing momentum” in the housing market and improve affordability.

Ramani Sastri of Sterling Developers said lower rates will “strengthen market confidence” and must be passed on quickly to benefit buyers.

Saransh Trehan of Trehan Group called the cut a “strong catalyst for housing demand,” adding that developers will benefit from easier financing.

Rajat Khandelwal of Tribeca Developers added that the move is “much-needed relief” for buyers facing high EMIs in major cities.

Dinesh Yadav of Fine Acers said even a small rate drop helps developers reduce costs and manage large projects better.

Rohit Kishore of Hero Realty said stable borrowing costs will help both buyers and builders maintain momentum in the housing market.

The RBI said it will keep working with banks, markets, and regulators to maintain stability and support the economy through steady growth and low inflation.