"RBI delivered on most fronts": Experts hail "forward-looking" 25 bps repo rate cut

New Delhi [India], December 5 (ANI): Economists and bankers have opined that the Reserve Bank of India (RBI) has "delivered on most fronts" following the apex bank's Monetary Policy Committee's decision to reduce the repo rate by 25 basis points to 5.25%.

Radhika Rao, Executive Director and Senior Economist, DBS Bank said, "The RBI delivered on most fronts, lowering rates as per our expectations and taking pro-liquidity steps, as well as measures to prevent a re-hardening in borrowing costs. The policy decision was likely dictated by a higher weightage given to below-target inflation, which had provided a sizeable real rate buffer."

"Policy guidance was also constructive, which is likely to be received positively by the onshore markets. The committee typically refrains from providing directional cues on the currency, instead emphasising a preference to minimize volatility and discourage one-sided speculative bets," Rao said.

Dharmakirti Joshi, Chief Economist, Crisil Ltd said, "The accompanying liquidity-enhancing measures, including open market purchases and forex swaps, underscore the growth-supportive nature of this policy decision. The repo rate cut is expected to support growth next fiscal, as monetary policy typically has a lagged effect."

"Today's liquidity-enhancing measures will also help transmit the policy rate cut to broader market interest rates," Joshi said.

Samantak Das, Chief Economist and Head of Research & REIS, India, JLL said, "This is not a reactive measure to a slowdown, but a confident and forward-looking deployment of monetary space to deliver a structural stimulus, ensuring the nation's growth engine becomes more inclusive."

Churchil Bhatt, Executive Vice President - Investment, Kotak Mahindra Life Insurance Company said RBI's announcement of Rs 1 lakh crore of bond purchases and a USD 5 billion, three-year FX swap will support growth and ensure liquidity.

"These measures are growth-supportive, and the evolving growth-inflation mix keep the door open for one more rate cut. Financial conditions should therefore supportive for rate transmission and for bond market sentiment," Bhatt said.

Ranen Banerjee, Partner and Economic Advisory Leader at PwC India said, "The repo rate cut by the MPC was on expected lines as inflation has been benign and the inflation outlook is also soft, and there are concerns on the demand side. The MPC has also acted on the liquidity aspects, and the announcement on the rupee-US dollar swap is going to address the rupee volatility."

Binod Kumar, MD & CEO, Indian Bank said, "The move will further bolster domestic demand against a weakening rupee. OMO purchase and 3 year buy/sell swap of dollar will further improve liquidity in the banking system. Retail customers and MSMEs can expect more affordable credit and greater confidence to plan ahead."

Rajiv Anand, Managing Director & CEO, IndusInd Bank said, "The MPC has used the space for easing created by CPI inflation slipping to a record low, supported by a generalised decline across key constituents. With inflation for the current year now expected to average 2%, at the lower end of the target band, the decision to cut the repo rate reiterates the primacy of a rules-based monetary framework, even as real GDP growth is now projected higher at 7.3%. The continuation of a neutral policy stance indicates that future rate action will remain contingent on evolving macroeconomic conditions, although there is space for further easing," Anand said.

"A durable liquidity infusion of nearly ₹1.5 trillion through bond purchases and FX swaps will support policy transmission via market rates, particularly in the sovereign bond market. Overall, easier financial conditions will help sustain growth momentum, even as external-sector headwinds persist," he added.

Salee S Nair, MD & CEO, Tamilnad Mercantile Bank said, "The unanimous 25 basis-point cut in the repo rate to 5.25%, accompanied by a neutral policy stance, reflects the RBI's commitment to sustaining growth while maintaining price stability. Looking ahead to 2026, the banking sector can anticipate a stable-to-supportive interest rate environment and sustained liquidity."

Rajeev Juneja, President, PHDCCI said, "the 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."

"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," PHDCCI President said.

Anant Goenka, President, FICCI, said, "This calibrated easing will help stimulate credit offtake, reduce borrowing costs for industry and consumers, and reinforce the current growth momentum."

"The upward revision, as announced in the policy today, of estimated GDP growth for current fiscal to 7.3% from 6.8%, combined with a stable and benign inflation outlook, reflects the continued resilience of the Indian economy and the positive impact of sustained policy and reform measures -- including the rationalisation of GST," Goenka said. (ANI)

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