In a major move to support economic momentum, the Reserve Bank of India (RBI) on Thursday reduced the repo rate by 25 basis points, bringing it down from 5.50% to 5.25%. This is the fourth rate cut of 2025, taking the total easing this year to 125 basis points. The decision was announced after the Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, concluded its three-day policy review held on December 3–5.

Malhotra said the MPC took a unanimous decision after evaluating cooling inflation, robust economic activity and the need to maintain liquidity at supportive levels. Following the rate adjustment, the Standing Deposit Facility (SDF) rate stands revised to 5%, while the Marginal Standing Facility (MSF) and the bank rate have been aligned to 5.5%. The committee retained its Neutral stance, signalling further decisions will depend on evolving economic conditions.

To bolster liquidity, the central bank unveiled two major initiatives — an Open Market Operation (OMO) purchase of government securities worth ₹1 lakh crore and a three-year USD 5 billion dollar–rupee swap facility. These steps are aimed at injecting long-term liquidity into the financial system, easing borrowing costs across sectors.

Real Estate Sector Welcomes the Move

The real estate industry reacted positively, calling the cut a timely boost for homebuyers facing rising property prices. Experts noted that with most home loans linked to external benchmark rates, the repo cut is likely to reduce EMIs, although the speed of rate transmission will depend on how quickly banks adjust their lending rates.

Anuj Puri, Chairman of ANAROCK Group, said the rate cut strengthens the purchasing power of buyers in the affordable and mid-income housing segments, which remain highly sensitive to interest cost fluctuations. With property values rising nearly 10% in 2025, he said the latest reduction could help revive demand and sustain sales growth into early 2026.

Developers also expressed confidence:

• Pramod Kathuria, CEO of Easiloan, said lower borrowing costs will improve homebuyers’ financial flexibility, while AI-enabled loan comparison tools will speed up decision-making.

• Praveen Sharma, CEO of REA India (Housing.com), said the cut will meaningfully lower EMIs, encouraging new project launches and driving sales in key urban markets.