{"id":85405,"date":"2025-12-08T00:00:00","date_gmt":"2025-12-08T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/mena-india\/reserve-bank-of-india-trims-repo-rate-to-5-25-opens-liquidity-tap\/"},"modified":"2025-12-08T00:00:00","modified_gmt":"2025-12-08T00:00:00","slug":"reserve-bank-of-india-trims-repo-rate-to-5-25-opens-liquidity-tap","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/mena-india\/2025\/12\/08\/reserve-bank-of-india-trims-repo-rate-to-5-25-opens-liquidity-tap\/","title":{"rendered":"Reserve Bank of India trims repo rate to 5.25%, opens liquidity tap"},"content":{"rendered":"

RBI<\/strong> cuts rate for India\u2019s Goldilocks run: <\/strong>The Reserve Bank of India\u2019s (RBI) monetary policy committee has lowered the repo rate by 25 basis points (bps) to 5.25% from 5.50%, RBI Governor Sanjay Malhotra said at a press conference<\/a>. The central bank has now cut policy rates by a cumulative 125 bps during 2025.<\/p>\n

(** Tap or click the headline above to read this story with all of the links<\/strong> to our background and outside sources.)<\/p>\n

Keeping its monetary policy stance neutral<\/strong>, the governor cited rapid disinflation and resilient growth behind the \u201crare Goldilocks\u201d period. He added that inflation, at a record low of 0.25% in October, provides room for policy maneuver, while economists anticipate a further rate cut towards a terminal 5%.<\/p>\n

Growth up, inflation down: <\/strong>The RBI raised its FY 2026 GDP growth forecast to 7.3% from its previous estimate of 6.8%. The inflation forecast is also down to 2% from 2.6% in October. Disinflation has become broad-based due to favorable food-supply conditions, moderating global commodity prices, and adequate reservoir levels, Malhotra said.<\/p>\n

On the INR depreciation: <\/strong>The central bank will tolerate a weaker currency but intervene to curb undue volatility. \u201cWe don\u2019t target any specific price levels or bands. We let markets function; they are very deep and efficient. We just let the [INR] find its correct position, correct level,\u201d Malhotra stated.<\/p>\n

India\u2019s forex reserves are at USD 686 bn<\/strong>, providing a healthy import cover of more than 11 months of imports.<\/p>\n

External risks poke the bear: <\/strong>The RBI flagged downside risks from global conditions, but expects India to \u201ccomfortably\u201d meet external financing needs.<\/p>\n

\n

Liquidity injection and currency swaps-<\/p>\n

Liquidity boost:<\/strong> The RBI will buy government-bonds worth INR 1 tn (USD 11 bn) this month to inject liquidity into the banking system. It will also conduct a USD 5 bn INR-USD foreign-exchange swap, under which it will purchase USD and sell them back three years later, as it seeks to address tight liquidity following extensive currency-market intervention. <\/p>\n

The governor stressed that the repo rate is the primary monetary-policy instrument<\/strong>, with open-market operations focused on liquidity management rather than influencing government-bond yields. The bond purchases are expected to offset cash drain caused by RBI\u2019s USD sales to support a weakening INR, which has become Asia\u2019s worst-performing currency this year. <\/p>\n","protected":false},"excerpt":{"rendered":"

The central bank is delivering a rate cut and strong liquidity measures amid disinflation; sees room for more easing<\/p>\n","protected":false},"author":1,"featured_media":85406,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2647],"tags":[2616,2514,2402,2646,2576,2394,2575],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-85405","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-data","tag-economy","tag-enterpriseam-india","tag-indian-economy","tag-inflation","tag-macroeconomics","tag-reserve-bank-of-india","wpautop","entry"],"acf":{"mongo_id":"d575ec8e-0e33-44ef-8c65-72660b760e4c","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/12\/407.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Reserve 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