India's RBI Cuts Repo Rate to 5.25% Amid Economic Growth

The Reserve Bank of India has cut the repo rate by a quarter point to 5.25%, reflecting confidence in the nation's economic growth as inflation remains exceptionally low. According to the Times of India, the State Bank of India praised this decision as 'exceptional', emphasizing the central bank's role in supporting economic growth.

The RBI's Monetary Policy Committee made this unanimous decision amid global uncertainties, with India's GDP expanding over 8.2% in the July to September 2025 quarter and inflation dropping to just 0.25% in October.

SBI Research notes that such a rate cut during periods of strong growth is rare globally, with historical precedents showing few instances where central banks reduced rates under similar conditions. The RBI has also revised its inflation forecast for 2025 to 2026 down to 2.0% from earlier levels, indicating a strong downward trend supported by lower food prices and healthy agricultural production.

Despite this optimistic outlook, SBI Research cautions about external demand risks due to ongoing geopolitical tensions and trade policy uncertainties. However, they still expect GDP growth to remain above 7% in the upcoming quarters.

RBI Governor Sanjay Malhotra described the current economic climate as a rare 'goldilocks period' of strong growth and low inflation, expressing hope for continued progress as the new year approaches.