The decision to cut interest rates was taken unanimously. Stance was maintained as “neutral.”
The interest rate cut policy decision comes on the back of India reporting strong GDP growth of 8.2% in the second quarter and the first half of the current financial year. However, inflation figures on the retail side were well below the RBI mandate, which many economists believed would be a trigger for the central bank to cut interest rates.
RBI Governor Sanjay Malhotra, during his policy address mentioned that India’s economy saw rapid disinflation while GDP growth accelerated. He looks back at the year 2025 as “eventful” and “challenging.”
In view of the current liquidity conditions, the RBI will also conduct Open Market Operations (OMO) worth ₹1 lakh crore.
Open Market Operations (OMO) of the RBI refers to the purchase and sale of government securities in the open market to manage liquidity and regulate the money supply.
The Reserve Bank of India has also revised the full year GDP forecast higher to 7.3% from 6.8% earlier. Growth for the third quarter has been raised to 6.7% estimate from 6.4% earlier, while the fourth quarter estimate has also been revised higher to 6.5% from 6.2% earlier.
For the first quarter of financial year 2027, the 6.4% estimate earlier, has been raised higher to 6.7%.
With inflation falling to its current levels, the RBI has also revised the full year CPI inflation estimate lower to 2% from 2.6% earlier.
Estimates for the third quarter have been halved to 0.6% from 1.8% earlier, while that for the fourth quarter has been revised lower to 2.9% from 4% earlier.
The 4.5% CPI inflation estimate for the first quarter of financial year 2027 has also been revised lower to 3.9%.
This is a breaking, developing story and will be updated with more.
First Published: Dec 5, 2025 10:05 AM IST
