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RBI MPC Meeting: Repo Rate Cut to 5.25% Boosts Economic Optimism

Published: December 05, 2025 | Category: Real Estate
RBI MPC Meeting: Repo Rate Cut to 5.25% Boosts Economic Optimism

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday (December 5) voted unanimously to reduce the repo rate by 25 basis points to 5.25%, while retaining a neutral policy stance. RBI Governor Sanjay Malhotra described the current economic conditions as a “rare Goldilocks period,” with strong growth and controlled inflation.

This reduction in the repo rate is expected to have a significant impact on various sectors of the economy, particularly the real estate sector. The move is seen as a positive step towards boosting investment and consumer spending, which could help in revitalizing the economy.

The central bank also announced open market operations (OMO) purchases of ₹1 lakh crore in G-Secs and a three-year dollar-rupee buy-sell swap. These measures are designed to ensure liquidity in the financial system and support economic growth.

Looking ahead, the RBI projects that growth will moderate slightly, while headline and core inflation are expected to remain at or below 4% during the first half of FY27. This provides the central bank with the policy space to continue supporting the economy through accommodative measures.

The real estate sector, in particular, is expected to benefit from the repo rate cut. Lower interest rates can make home loans more affordable, potentially leading to increased demand for properties. This could help in reviving the real estate market, which has been facing challenges in recent years.

Overall, the MPC’s decision is a strategic move to balance economic growth and inflation. It is hoped that this will lead to a more robust and sustainable economic environment, benefiting businesses and consumers alike.

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Frequently Asked Questions

1. What is the repo rate?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. A reduction in the repo rate typically leads to lower lending rates for businesses and consumers.
2. What is the MPC and what does it do?
The Monetary Policy Committee (MPC) is a committee within the Reserve Bank of India (RBI) responsible for setting the benchmark interest rates in India. The MPC meets regularly to review and set monetary policy to achieve inflation targets and support economic growth.
3. What is the impact of
repo rate cut on the real estate sector? A: A repo rate cut generally makes home loans more affordable, which can increase demand for properties. This can help in reviving the real estate market and boosting the sector's growth.
4. What are open market operations (OMOs)?
Open market operations (OMOs) are transactions conducted by the central bank to buy or sell government securities in the open market. These operations are used to control the money supply and manage liquidity in the financial system.
5. What is the projected inflation rate for the first half of FY27?
The Reserve Bank of India (RBI) projects that headline and core inflation will remain at or below 4% during the first half of FY27. This projection provides the central bank with the policy space to support the economy through accommodative measures.