RBI cuts repo rate to 5.25%; upgrades GDP outlook as liquidity boosts take centre stage

Economic Times
Economic Times
1m ago • 1 views
The Reserve Bank of India reduced the repo rate to 5.25% and raised the GDP growth forecast for FY26 to 7.3%.
RBI cuts repo rate to 5.25%; upgrades GDP outlook as liquidity boosts take centre stage
A What happened
On December 8, 2025, the Reserve Bank of India (RBI) announced a 25 basis point cut in the repo rate, bringing it down to 5.25%. This decision was made by the Monetary Policy Committee after a three-day review and was accompanied by an upgrade in the GDP growth forecast for FY26 from 6.8% to 7.3%. The RBI cited broad-based economic momentum across various sectors as a reason for this optimistic outlook. Additionally, the central bank introduced liquidity measures, including open market purchases of government bonds worth ₹1 lakh crore, aimed at enhancing financial conditions and supporting economic growth. The RBI's actions are seen as a response to stable inflation and a need for improved transmission of previous rate cuts.
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Key insights

  • 1

    Repo Rate Cut

    The RBI's repo rate was reduced to 5.25%, aiming to lower borrowing costs.

  • 2

    GDP Growth Forecast Increased

    The GDP growth forecast for FY26 was raised to 7.3%, reflecting economic resilience.

  • 3

    Liquidity Measures Announced

    The RBI announced open market purchases of ₹1 lakh crore to enhance liquidity.

Takeaways

The RBI's recent monetary policy adjustments aim to support economic growth while managing inflation. These measures may lead to improved financial conditions in the market.

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