Introduction to RBI’s Monetary Policy Committee Meeting
The Reserve Bank of India’s Monetary Policy Committee (MPC) is set to hold its final bi-monthly meeting of the calendar year 2025. This meeting is crucial as markets are closely watching for signals on further monetary easing amid unusually low inflation and signs of softening consumption.
RBI MPC December 2025 Meeting Schedule
The three-day MPC meeting, chaired by RBI Governor Sanjay Malhotra, will take place from December 3 to December 5, 2025. The monetary policy decision, including any change in the repo rate and stance, will be announced on Friday, December 5, 2025, at 10:00 AM IST.
Repo Rate Journey in 2025 So Far
The RBI has already reduced the repo rate by a cumulative 100 basis points in 2025 through three separate actions. The first came in February with a 25-bps cut, followed by a 25-bps cut in April and then in June with a 50-bps cut. Since the June move, the central bank has kept the repo rate unchanged at 5.50% in both the August and October reviews while shifting its stance to “neutral” to retain flexibility.
Record-Low Inflation Opens Door for Rate Cut
October 2025 consumer price inflation plunged to an all-time low of 0.25%, driven primarily by a sharp drop in food prices and favorable base effects. Core inflation, however, remained steady near 4.4%. The dramatic cooling in headline inflation has given the RBI significant room to support growth without worrying about price pressures in the near term.
What Economists Are Saying Ahead of December 5 Announcement
Most economists polled by Reuters expect the RBI to deliver a 25 basis points repo rate cut, taking the policy rate to 5.25%. Some participants have not ruled out a slightly larger 50 bps reduction if the central bank wants to front-load support to consumption. Economists like Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, and Garima Kapoor, Economist, Elara Securities, believe that the RBI will need to separate festive and GST-related demand from genuine cyclical recovery and that the all-time low CPI print clears the path for a 25 bps cut in December and another similar move in February 2026.
Key Factors the MPC Will Weigh
The MPC will consider several key factors, including:
- Sustaining growth momentum amid weak rural and urban consumption
- Risk of prolonged sub-2% inflation turning into deflationary pressures
- Global uncertainties, including potential tariff actions under the new U.S. administration
- Comfortable liquidity and stable external sector indicators
Conclusion
Investors and households will get clarity on Friday morning when Governor Sanjay Malhotra addresses the media after the policy announcement. With record-low inflation and signs of softening consumption, the RBI’s decision will be crucial in determining the future course of the economy. As the RBI balances growth and inflation, its decision will have significant implications for the country’s economic trajectory. The meeting’s outcome is expected to provide much-needed direction to the markets and the economy, and it will be interesting to see how the RBI navigates the challenges ahead.
