Buoyed by stronger-than-expected economic momentum and a steady cooling in inflation, the Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday unanimously cut the repo rate by 25 basis points (bps) to 5.25 per cent, a move that is likely to bring down lending and deposit rates across the banking system.

The reduction — the first after two consecutive pauses — signals a calibrated shift towards supporting growth at a time when the rupee has depreciated and breached the 90-mark against the dollar.

The central bank said the combination of robust GDP numbers and a benign inflation trajectory created the policy space to pivot toward accommodation. The growth engine has been firing ahead of expectations, prompting the RBI to sharply lift its GDP projection for FY26 by 50 bps to 7.

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