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RBI MPC Meeting: RBI Governor Sanjay Malhotra announced after the monetary policy meeting today that the repo rate has been reduced and the inflation rate is also likely to come down in the financial year 2026.
5 December, 2025
RBI MPC Meeting: The Reserve Bank of India has given a New Year gift to the country even before the New Year. RBI Governor Sanjay Malhotra announced after the monetary policy meeting today that the repo rate has been reduced and the inflation rate is also likely to come down in the financial year 2026. To further strengthen the economic growth, RBI has reduced the interest rate by 25 basis points to 5.25 percent, which was earlier 5.50 percent. With this change, housing, auto and commercial loans are expected to become cheaper.
Interest rate increased to 5.25 percent
Announcing the monetary policy for this financial year, RBI Governor Sanjay Malhotra said that the Monetary Policy Committee (MPC) has unanimously decided to cut the short-term lending rate or repo rate by 25 basis points to 5.25 percent, keeping it neutral. This rate cut comes after headline retail inflation based on the Consumer Price Index (CPI) remained below the lower band of 2 percent set by the government for the last three months.
VIDEO | Mumbai: RBI Governor Sanjay Malhotra says, “After reviewing the liquidity situation and outlook, we have decided to conduct OMO purchases of government securities worth one lakh crore rupees this month. We will also be conducting a three-year dollar–rupee buy-sell swap,… pic.twitter.com/dLfQQg2zx8
— Press Trust of India (@PTI_News) December 5, 2025
GDP will increase
Services exports are expected to remain strong, while merchandise exports face difficulties, at risk of decline due to external uncertainties. Taking all things into consideration, RBI has increased the growth estimate for the current 2026-27 financial year to 7.3 percent from the earlier 6.8 percent. For Q3FY26, the central bank raised its growth forecast to 7.0% from 6.4%. The estimate for Q4FY26 was also raised to 6.5% from 6.2%. Similarly, the estimate for Q1FY27 was raised to 6.7% from 6.4%, while growth for Q2FY27 is estimated at 6.8%.
VIDEO | Mumbai: RBI Governor Sanjay Malhotra says, “Services exports are expected to remain strong while merchandise exports face headwinds, with external uncertainties posing downside risks. Taking all factors into account, real GDP growth for this year is projected at 7.3%, up… pic.twitter.com/3XQxVxtq8X
— Press Trust of India (@PTI_News) December 5, 2025
decline in inflation rate
Along with this, RBI has also given big relief in inflation rate. The central bank has announced that inflation for the next fiscal year, 2025-26, is estimated to be only 2.6 percent, which is much lower than the 4.2 percent estimate made in February. Apart from this, inflation is expected to be 4 percent in the last three months of fiscal year 2026 and 4.5 percent in the first quarter of 2027. This means that the coming year will be very comfortable in terms of inflation, prices will not increase much and the burden on the pocket will be less.
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