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The Reserve Bank of India’s Monetary Policy Committee cut the policy repo rate by 25 basis points to 5.25% on December 5, 2025, with immediate effect. The six-member committee voted unanimously and kept its stance neutral. This is the decision announced in December 2025—not the current rate: a later record reports a 5.50% repo rate in October 2026.
What are the new RBI repo, SDF and MSF rates?
At the meeting held December 3–5, 2025, the RBI set the repo rate at 5.25%. The standing deposit facility (SDF) rate was set at 5.00%, while the marginal standing facility (MSF) rate and Bank Rate were set at 5.50%. These rates took effect immediately after the decision.
The repo rate is the policy rate at which the RBI lends to banks against eligible securities. The SDF and MSF rates form part of the RBI’s operating framework for absorbing and providing liquidity. The rate cut was accompanied by, but distinct from, two liquidity measures: government-securities open-market purchases of ₹1,00,000 crore and a three-year USD/INR buy-sell swap of USD 5 billion, announced in response to evolving liquidity conditions.
Why did RBI cut the repo rate to 5.25%?
The MPC said headline inflation had eased significantly and was likely to be softer than it had previously projected, primarily because food prices were exceptionally benign. It also said core inflation had eased at the margin in Q2:2025-26 and was expected to remain anchored. With inflation looking more benign, the committee saw room to support growth, while noting that growth remained resilient but was expected to soften somewhat.
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Governor Sanjay Malhotra described the backdrop in his December 2025 statement: “Inflation at a benign 2.2 per cent and growth at 8.0 per cent in H1:2025-26 present a rare goldilocks period.” Those H1 figures refer to the first half of FY2025-26; they are not the full-year projections.
What growth and inflation figures did the RBI cite?
The RBI reported real GDP growth of 8.2% and real gross value added (GVA) growth of 8.1% for Q2:2025-26. At the December 2025 meeting, it projected real GDP growth of 7.3% for FY2025-26 and CPI inflation of 2.0% for that fiscal year. The quarter-level figures below were also forecasts made at that meeting, not later actual results.
| Measure | RBI figure at the December 2025 meeting | What it describes |
|---|---|---|
| Real GDP growth | 8.2% | Reported result for Q2:2025-26 |
| Real GVA growth | 8.1% | Reported result for Q2:2025-26 |
| Real GDP growth | 7.3% for FY2025-26; 7.0% in Q3 and 6.5% in Q4 | RBI projections made at the December 2025 meeting |
| CPI inflation | 2.0% for FY2025-26; 0.6% in Q3 and 2.9% in Q4 | RBI projections made at the December 2025 meeting |
What does a 25-basis-point repo rate cut mean?
One basis point is one-hundredth of a percentage point. A 25-basis-point cut is therefore a reduction of 0.25 percentage point. In this decision, the repo rate moved from 5.50% to 5.25%.
The policy rate is not the interest rate every borrower or depositor receives. Banks and other lenders set customer rates under their own product terms and applicable benchmarks. The RBI cut can influence borrowing and deposit rates, but its pass-through depends on the product and lender.
Will the RBI repo rate cut lower my loan EMI?
Not automatically, and the December 2025 decision alone does not establish a particular EMI reduction. For a floating-rate loan, the effect depends on whether its rate is linked to an external benchmark, the lender’s pass-through, the loan’s reset schedule, and its remaining principal. A fixed-rate loan generally does not reprice just because the policy rate changes.
- Check the loan agreement or lender statement: identify whether the loan is fixed or floating and, if floating, what benchmark it follows.
- Find the reset date and frequency: a benchmark-linked rate may change only when the loan reaches its scheduled reset.
- Ask the lender how the revised rate is applied: the lender can explain the effect on your rate, EMI or remaining term for your account.
Deposit rates are also product-specific. A policy cut does not guarantee a particular change to an existing deposit; check the deposit’s terms and the institution’s repricing date.
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Is 5.25% still the RBI repo rate?
No. The 5.25% figure is the outcome of the December 5, 2025 decision, not the current policy rate as of October 8, 2026. A later record of an October 2026 decision reports a 25-basis-point increase to 5.50%. That later figure is based on a secondary reproduction of an RBI record, rather than an RBI page directly reviewed here, so consult the RBI’s original policy release for confirmation.
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