The Reserve Bank of India’s Monetary Policy Committee (MPC) on December 5 decided to reduced the the repo rate by 25 basis point to 5.25% form 5.5% and maintain its “neutral” policy stance, signalling a wait-and-watch approach amid steady inflation and cautious growth

The RBI announced a set of liquidity-support measures, including ₹1 lakh crore of OMO purchases and a three-year USD/INR swap worth $5 billion, both scheduled for December.

Core inflation moderated in the second quarter and is expected to remain contained, aided by softer precious metal prices. The RBI now projects full-year CPI inflation at 2%, lower than the outlook provided in October.

Economic activity across the country remains firm, underpinned by strong rural demand and a steady urban recovery. Agriculture continues to play a significant role in driving growth, supported by healthy crop output and comfortable reservoir levels.

Manufacturing momentum is strengthening, while services exports are expected to hold up well even as merchandise exports face global pressures.