NEW DELHI — The Reserve Bank of India lowered the repo rate by 25 basis points to 5.25% after a unanimous decision by the Monetary Policy Committee (MPC), citing easing inflation and supportive growth conditions. The committee met over three days as it assessed record-low inflation against a weakening rupee.
The central bank noted that retail inflation is expected to remain softer than earlier estimates. It projects Consumer Price Index inflation at 2% for FY2025–26. For the first quarter of FY2026–27, inflation is forecast at 3.9%, down from 4.5%, with precious metal prices expected to influence the headline number. Governor Sanjay Malhotra said risks to inflation remain balanced and current conditions offer continued policy space.
Growth projections were revised upward, with GDP for the current financial year now estimated at 7.3% compared with the earlier 6.8%. The October–December quarter forecast was also raised to 6.7%. The previous quarter registered growth of 8.2%, the highest in six quarters.
The MPC implemented a rate cut. It also reduced the Standing Deposit Facility rate to 5%. The Marginal Standing Facility rate was reduced to 5.5%. The RBI will conduct forex swaps. It will purchase ₹1 lakh crore in government bonds through Open Market Operations to support liquidity.
Industry representatives said the policy stance strengthens the operating environment across financial sectors. Ritesh Taksali, Chief Investment Officer at Edelweiss Life Insurance, said that the measures support growth as inflation remains subdued, adding that liquidity actions through OMOs and foreign exchange swaps aim to ease pressure from dollar outflows.
Shilpa Bhatter, Chief Financial Officer of UGRO Capital, said that the revised inflation outlook and liquidity measures create conditions conducive to credit expansion. She noted that softer funding conditions would benefit non-banking financial companies and help improve credit flow to micro, small and medium enterprises.
