The ongoing rate easing cycle may not be over yet.
FinTech BizNews Service
Mumbai, 5 December 2025: The Monetary Policy Committee (MPC) held its 58th meeting from December 3 to 5, 2025, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC voted unanimously to reduce the policy repo rate under the liquidity adjustment facility (LAF) to 5.25 per cent. Consequently, the standing deposit facility (SDF) rate shall stand adjusted to 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.50 per cent. The MPC also decided to continue with the neutral stance.
Siddhartha Sanyal, Chief Economist & Head Research, Bandhan Bank, underlines:
“Highlight of Friday’s policy is the emphatic liquidity support, especially durable liquidity, by the RBI. The central bank has delivered decisively on this front announcing OMO purchases of INR 1 trillion and 3-year USD/INR buy-sell swaps of USD 5 billion, injecting durable liquidity worth INR 1.45 trillion during December. One feels the RBI may continue with such liquidity supportive measures during Q4. This will likely materially aid transmission to bond yields and lead to further softening in bank lending rates.
With inflation expected to average around 3% over the next about 12 months, current real rate would still be significantly higher than the RBI’s perceived neutral real rate of 1.4-1.9%, which implies that the ongoing rate easing cycle may not be over yet.”
