RBI MPC Meeting Highlights: Repo Rate Cut to 5.25% – What It Means for You?

Key Highlights

• The Reserve Bank of India (RBI) has cut the repo rate by 0.25%, from 5.5% to 5.25%, as of December 2025. This is the fourth rate cut this year, making a total cut of 1.25% in 2025.
  
• The RBI kept its overall policy stance neutral, balancing growth and inflation.
  
• The forecast for India’s economic growth in 2025-26 has been increased from 6.8% to 7.3%, with strong growth seen in the first half of the year.
  
• RBI plans to buy government bonds worth ₹1 lakh crore and has arranged a $5 billion currency swap to support liquidity.
  

What This Means for the Economy

RBI Governor Sanjay Malhotra pointed out positive signs in the economy, like a good harvest season, simpler GST rules, low inflation, and strong company finances. 

However, there are global uncertainties like the US tariffs, so RBI wants to keep enough liquidity measures to ensure durable funding. The MPC also raised economic growth forecasts due to government fiscal discipline and increased private investments.

Implications for Borrowers and Markets

Thanks to the rate cut, loans like home loans, car loans, and personal loans could become cheaper as banks usually lower their lending rates. 

This means your EMIs might reduce, giving some relief to borrowers. Stock markets reacted positively with small gains in indexes like Nifty and Sensex. Investors may find it a good time to move money into stocks as borrowing costs fall. 

Source: Google Finance

The cut also helps the rupee by stabilising currency markets through RBI’s swap arrangements.

What to Watch Next

RBI’s move supports economic growth while keeping inflation low, which is good for both consumers and businesses. Keep an eye on inflation data in the coming months, which will guide further RBI measures. This policy change positions India for steady growth in the year ahead while helping borrowers manage costs better.

This rate cut makes it easier for you to borrow and invest, giving a boost to the economy even amidst international uncertainties. It’s a positive step for anyone planning bigger purchases, investments, or looking to benefit from a growing stock market.

Source: Economic Times