RBI Governor Sanjay Malhotra announced a unanimous 25 bps repo rate cut to 5.25%, citing rapid disinflation since October, consolidated banking, and rare Goldilocks economy. Geopolitical/trade risks cloud outlook, but MPC supports growth amid controlled inflation.
Policy Announcement
Governor Malhotra kicked off the Dec 5 MPC statement, highlighting swift disinflation post-October policy and banking sector strengthening. The 6-member committee unanimously slashed repo from 5.50% to 5.25%, reverse repo to 4.75%, maintaining accommodative stance. This marks second consecutive cut after October's surprise easing.
Economic Backdrop
India enjoys "rare Goldilocks period" with robust growth, cooling inflation, and stable macros. Rapid price moderation validates prior actions, though global geopolitics and trade tensions pose downside risks. Banking consolidation enhances transmission; MPC balances growth-inflation via calibrated liquidity. Markets surged post-announcement.
Key Highlights
-
Repo Rate: 5.25% (cut 25 bps); unanimous vote.
-
Disinflation: Rapid progress since Oct policy.
-
Goldilocks: Rare growth-inflation sweet spot.
-
Risks: Geopolitics, trade environment headwinds.
Sources: Moneycontrol Live Updates, Reuters