Images: Shutterstock
The Reserve Bank of India (RBI) on December 5 announced a 25 basis points (bps) repo rate cut, bringing it down to 5.25% from 5.5%.
This brings the overall repo rate cut in 2025 to 125 bps (1.25%), introduced over four Monetary Policy Committee (MPC) meetings. Let’s look at the repo rate trajectory in 2025.
In February, the RBI MPC decided to cut the repo rate by 25 bps, lowering it from 6.5% to 6.25%, and maintained the neutral stance. This was the first cut in five years.
In April, the MPC again reduced the repo rate by 25 bps, bringing it down to 6% from 6.25%, and changed the monetary policy stance to accommodative.
In June, the RBI frontloaded a 50 bps repo rate cut, lowering it to 5.5%. The MPC switched its monetary policy stance to neutral, from accommodative before.
In both August and October, the RBI MPC decided to keep the repo rate unchanged at 5.5% and maintained the neutral monetary policy stance.
The December rate cut announced suggests that the RBI is slowly shifting back toward supporting growth, increasing money supply into the economy after a pause since August.
A neutral monetary policy stance means the RBI is open to moving in either direction in the coming months. Future decisions will depend on inflation, growth and liquidity.
Thanks for reading!
See next