RBI Reduced Repo Rate by 25 bps Today Inspite of Record High GDP

The RBI MPC meeting has been in full swing today, and markets are reacting positively to the announcements. While the experts were divided about the rate cut announcement today, as Q2FY26 GDP surged to a record high, but RBI finally announced a 25 basis points (bps) rate cut in today’s RBI monetary policy meeting. 

Key Announcements of RBI MPC Meeting 

• RBI repo rate reduced by 25 bps to 5.25% 
• ₹1 lakh crore to be infused in the markets via Open Market Operations (OMO) for boosting liquidity 
• A 3-year USD/INR swap of $5 billion will be conducted in this month of December
• CPI inflation for full FY26 projected at 2%, down from 2.6% earlier
• GDP growth projected at 7.3% for fiscal year 2025-26, up from 6.8% 
• Bond yields drop by 3 bps after OMO announcements – 10-year benchmark yield at 6.47%
• Agriculture continues to be a major growth driver 

Effect of Repo Rate Cut  

• Effect on Loan EMIs: As the repo rate is further reduced to 5.25%, down by 25 bps, the loan EMIs, especially the home loan interests, are set to fall as forecasted by the experts. This can, in turn, reduce the EMI burden for the borrowers to some extent. 
• Effect on Depositors: For the fixed deposit owners, the reduced repo rate can be a concern; however, the rate cut won’t be implemented for FDs immediately. Thus, the interest rate earned by the fixed deposit owners won’t drop suddenly. Rather, the banks will perhaps cut the deposit rates slowly, especially for the short and medium-term deposits. 
• Effect in the Real Estate Sector: As per experts, this 25-bps repo rate cut can be a game-changer for the Indian real estate sector. Reduced rates can reduce home loan interest, which can boost the demand for properties, especially for the affordable and mid-priced properties. These properties are highly sensitive to interest rates. As with this rate cut, the RBI in total, reduced 125 bps since last year, which has a huge positive impact on the real estate sector. The housing market did extremely well in 2025, and this rate cut is expected to set the ground for 2026’s solid performance as well. 

Share Market Reaction 

The announcements made in the RBI monetary policy committee today have positively affected the share market. The equity benchmark indices Nifty 50 and Sensex gained over 160 points and 400 points, respectively, till 1 p.m. in today’s market session. However, the broad market indices, such as the BSE midcap index, are almost flat, while the BSE smallcap index shed around 367 points.  

Source: https://www.moneycontrol.com

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