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RBI’s Monetary Policy (December 05, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on December 05, 2025. Here are some of the highlights of the monetary policy announcement.

Rates

 

ChangeRate
Policy repo rateReduced by 25 bps5.25%
Standing deposit facility (SDF) rate5.00%
Marginal standing facility (MSF) rate5.50%
Bank rate5.50%

Monetary policy stance

  • Monetary policy stance unchanged as ‘neutral’.

Domestic Economy 

  • Real Gross Domestic Product (GDP) growth accelerated to 8.2% in Q2, buoyed by strong spending during the festive season which was further facilitated by the rationalisation of the goods and services tax (GST) rates. 
  • Real GDP growth for 2025-26 is projected at 7.3%.
  • For the first time since the adoption of flexible inflation targeting (FIT), average headline inflation for a quarter at 1.7% in Q2, breached the lower tolerance threshold (2%) of the inflation target (4%). It dipped further to an all-time low of 0.3% in October 2025.
  • The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps.
  • CPI inflation for 2025-26 is projected at 2.0%.
  • RBI has decided to conduct the following operations during December 2025 to inject durable liquidity into the banking system –
    • Open Market Operation (OMO) purchase auctions of Government of India securities for an aggregate amount of ₹1,00,000 crore in two tranches of ₹50,000 crore each to be held on December 11, 2025, and December 18, 2025.
    • USD/INR Buy/Sell Swap auction of USD 5 billion for a tenor of 3 years to be held on December 16, 2025.
  • As on November 28, 2025, India’s foreign exchange reserves stood at US$ 686.2 billion, providing a robust import cover of more than 11 months.


References

Reserve Bank of India. (2025, December 05). 'Governor’s Statement: December 05, 2025'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61750


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