RBI Policy Highlights – December 2025

1. RBI Cuts Interest Rates by 25 Basis Points

To support economic growth, the Reserve Bank of India (RBI) has reduced key policy rates by 0.25% (25 basis points).

Meaning: Loans are expected to become slightly cheaper for consumers and businesses.

2. Monetary Stance: Neutral

RBI has maintained a neutral stance, meaning it is open to both further rate cuts or hikes based on inflation and growth data.

3. RBI’s Liquidity Support to Banking System

• OMO Purchase: ₹1 lakh crore – RBI will buy bonds to inject liquidity.
• Dollar–Rupee Swap: $5 billion (3-year tenor) – boosts forex and rupee liquidity.
• Current System Liquidity: ₹2.66 lakh crore surplus – banks have ample funds.

4. Economic Growth Outlook (GDP)

RBI has revised India’s growth forecast upward for FY26 to 7.3% from 6.8%, reflecting strong domestic demand and investment.

• FY26 Q2: 8.2% (Actual)
• Q3: 7.0% (earlier 6.4%)
• Q4: 6.5% (earlier 6.2%)
• FY27: 6.7% – 6.8%

5. Inflation Outlook

Retail inflation remains exceptionally low at 0.25% (October 2025). FY26 inflation forecast revised down to 2.0% from 2.6%.

• FY26 Q2: 1.72%
• Q3: 0.6%
• Q4: 2.9%
• FY27 Q1–Q2: ~4.0%

Meaning: Inflation is well under control, allowing RBI to remain accommodative.

6. Strong External Position

India’s forex reserves stand at $686 billion, enough to cover 11 months of imports — a clear sign of macroeconomic strength.

What This Means for the Economy

• ✅ RBI is supporting growth with a rate cut.
• ✅ Inflation is under control, giving policy flexibility.
• ✅ Ample liquidity to sustain credit growth.
• ✅ Growth outlook upgraded, economy resilient.
• ✅ Forex reserves provide external stability.

Overall Message: A balanced and growth-supportive policy by the RBI.