The Monetary Policy Committee (MPC) held its 58th meeting from December 3–5, 2025, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India.
The Committee noted a sharp moderation in headline inflation, which has softened more than earlier projections—primarily due to exceptionally benign food prices. Reflecting these favourable conditions, the MPC has further revised down its inflation outlook for 2025–26 and Q1:2026–27.
Core inflation, which had been rising steadily since Q1:2024–25, eased marginally in Q2:2025–26 and is expected to remain stable going forward. Both headline and core inflation are projected to stay around the 4% target during the first half of 2026–27.
Despite resilient economic activity, growth momentum is expected to moderate slightly. Considering these evolving macroeconomic conditions, the MPC **unanimously voted to reduce the policy repo rate by 25 basis points**, bringing it down to 5.25%, while continuing with a neutral stance.
As a result, the following adjustments have come into effect:
Updated RBI Policy Rates
| Instrument | New Rate |
| CRR | 3.00% |
| SLR | 18% |
| Repo rate | 5.50% |
| SDF* | 5.25% |
| *Reverse repo rate | 3.35% |
| Bank Rate | 5.75% |
| MSF Rate (Marginal Standing Facility Rate) | 5.75% |
About the SDF
The Standing Deposit Facility (SDF), introduced in April 2022, is now the **effective floor** of the policy rate corridor. It allows banks to **park excess funds with the RBI without collateral**, helping absorb surplus liquidity and control inflation.
*While the reverse repo rate remains part of the RBI’s toolkit, its active use is currently limited, making it functionally redundant for now.
