Sanjay Malhotra-led MPC cuts repo rate by 25 bps to 5.25%; ups FY26 GDP growth estimates

By Admin

05 Dec, 2025

In a significant move aimed at supporting economic momentum, the Sanjay Malhotra-led Monetary Policy Committee (MPC) has announced a 25 basis point (bps) cut in the repo rate, bringing it down to 5.25%. This marks a pivotal shift in the RBI’s policy stance, signalling confidence in the country’s inflation trajectory and a desire to stimulate broader economic activity.

A Strategic Rate Cut to Boost Growth

The repo rate   the rate at which the RBI lends to commercial banks   plays a crucial role in shaping borrowing costs across the economy. This 25 bps reduction is expected to:

• Lower loan EMIs across sectors
  
  

• Encourage fresh investments by reducing the cost of capital
  
  

• Provide relief to businesses and consumers facing high credit costs
  
  

The MPC noted that with inflation gradually stabilising within the acceptable band, there is room for calibrated easing to support growth.

FY26 GDP Growth Outlook Revised Upward

Alongside the rate cut, the MPC has also revised FY26 GDP growth projections upward, signalling a robust economic outlook. The revised forecast reflects:

• Strong manufacturing and services performance
  
  

• Improving private consumption
  
  

• Renewed investment activity supported by policy measures
  
  

• Healthier export prospects as global markets stabilize
  
  

This positive revision showcases the committee’s confidence in India’s economic fundamentals and resilience.

Why This Decision Matters

The combination of a lower repo rate and stronger GDP growth forecast could provide a much-needed boost to credit-driven sectors such as real estate, infrastructure, MSMEs, and manufacturing. It also supports consumer sentiment as borrowing becomes more attractive.

For policymakers and industry leaders, this move reaffirms the RBI’s balanced approach   supporting growth while keeping inflation expectations anchored.

What Lies Ahead?

The MPC highlighted that future decisions will continue to depend on incoming data, inflation trends, and global economic developments. While this rate cut offers momentum, maintaining financial stability remains a priority.

As the economy moves into FY26 with improved projections, the rate cut sets the tone for a growth-focused policy environment.