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RBI to Hold Rates Steady in December MPC Meet
5 Dec, 2025
Summary
- RBI likely to keep repo rate at 5.5% unchanged.
- Economic growth surprises positively at 8.2% in Q2 FY26.
- Inflation remains below 2%, projected to rise slightly.
The Reserve Bank of India (RBI) is poised to maintain its current monetary policy, keeping the repo rate at 5.5% and its existing stance unchanged during the upcoming December Monetary Policy Committee (MPC) meeting. This decision comes as the central bank navigates a complex economic landscape characterized by robust growth and persistently low inflation.
India's economic expansion has shown remarkable resilience, with a surprising 8.2% growth recorded in the second quarter of FY26. This positive trend is further supported by high-frequency data indicating steady economic activity. However, recent indicators suggest a potential softening in momentum, and challenges like fading festive demand and a slowdown in government capital expenditure loom ahead.
Despite inflation remaining below the 2% threshold, largely driven by specific factors like vegetable prices and GST adjustments, the RBI faces a careful policy choice. The central bank is expected to revise its inflation forecasts downwards, but the limited scope for rate cuts and external factors like foreign inflows and currency pressures suggest a decision to hold rates steady is the most prudent path forward.
