RBI Policy repo rate reduced by 25BPS; will strengthen India’s growth trajectory and domestic production: PHDCCI
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) voted to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25BPS to 5.25% and continue with the neutral stance. This decision was made on the back of robust growth (real GDP growth at 8.2% Q2 FY 2026), buoyed by strong spending during the festive season, rationalisation of the goods and services tax (GST) rates, softer crude oil prices, and benign inflation (headline inflation at 0.3% in October 2025), to support the growth momentum” said Mr. Rajeev Juneja, President, PHDCCI.
Consequently, the standing deposit facility (SDF) rate stands at 5% and the marginal standing facility (MSF) rate and the bank rate at 5.50%.
Moreover, enhanced consolidation of the banking system, strengthened regulatory framework and healthy investment activity, especially of the private sector, have contributed to economy’s enhanced resilience, he added.
However, evolving geopolitical conditions, divergent inflation paths and trade environments globally, continue to weigh on the outlook, he said.
In its announcement today, the MPC decided to conduct Open Market Operation purchases of government securities of ₹1,00,000 crore and a 3-year USD/INR Buy Sell swap of USD 5 billion this month in view of the evolving liquidity conditions and outlook. These measures will ensure adequate durable liquidity in the system and further facilitate monetary transmission, said Mr. Juneja.
“It is worth noting that, although high-frequency indicators suggest that domestic economic activity is holding up in Q3 FY 2026, but there are some emerging signs of weakness in few leading indicators. PMI Manufacturing has moderated to a 9-month low of 56.6 in November 2025, accompanied with moderated growth of Index of Industrial production at 0.4% in October 2025 from 4.6% in September 2025,” said Mr Juneja.
Merchandise exports face some headwinds as they declined sharply in October amid subdued external demand, accompanied by softer services exports, he said.
Overall, India’s external sector remains resilient, as on November 28, 2025, India’s foreign exchange reserves stood at US$ 686.2 billion, providing a robust import cover of more than 11 months, he added.
The MPC projected real GDP growth at 7.3%, with CPI inflation at 2% for 2025-26. The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps, said Mr. Juneja.
“We appreciate RBI’s focus on improving customer services and their proposal to hold a two-month campaign from 1st January next year with an aim to resolve all grievances pending for more than a month with the RBI Ombudsman. This will further boost ease of doing business and reduce the cost of doing business,” said Mr Juneja.
The RBI’s commitment to remain proactive, objective and consistent amidst the downside risk of softening growth and external uncertainties despite, underlying inflation pressures staying lower, and upside potential of speedy conclusion of various ongoing trade and investment negotiations, is instilling confidence among industry, says CEO and Secretary General, PHDCCI, Dr. Ranjeet Mehta
