The financial markets and the nation's economy are holding their breath as the Reserve Bank of India (RBI) is set to announce the outcome of its crucial three-day Monetary Policy Committee (MPC) meeting today, December 5, 2025. The decision on the key repo rate, which influences borrowing costs across the economy, is the most anticipated development, especially after recent comments from the central bank's governor.
Governor's Hint and Market Expectations
All eyes will be on RBI Governor Sanjay Malhotra as he makes the policy announcement. The governor had recently indicated that current economic indicators suggest there is a scope for a repo rate cut. However, he clarified that the final decision rests with the six-member MPC. Despite this hint, most analysts and economists widely expect the committee to maintain a status quo, keeping the repo rate unchanged for the third consecutive time.
The Robust Economic Backdrop
The policy review arrives against an exceptionally strong economic backdrop. The Indian economy has demonstrated remarkable resilience and growth momentum. The latest data shows that the country's Gross Domestic Product (GDP) expanded by 8.2% in the second quarter of the fiscal year 2026. This marks the fastest pace of growth in six quarters, signaling robust economic activity.
Simultaneously, the inflation scenario has turned exceptionally favorable. The Consumer Price Index (CPI) inflation eased to a record low of 0.25% in October 2025. This combination of high growth and ultra-low inflation theoretically provides the central bank with room to consider easing monetary policy to support further economic expansion.
What to Watch For Today
While the repo rate decision will dominate headlines, Governor Malhotra's announcement will also include a slew of other important data and forward guidance. Key aspects to monitor include:
- The MPC's official stance on growth and inflation projections for the coming quarters.
- Any revisions to the GDP or CPI forecasts for the full fiscal year.
- Updates and announcements regarding the digital payments ecosystem, a key focus area for the RBI.
- The voting pattern of the MPC members, indicating the level of consensus or dissent on the rate decision.
The central bank's communication on its future policy path will be critical for markets, businesses, and consumers alike. A cautious hold, while expected, will be scrutinized for hints on the timing of a potential future rate cut cycle, which could lower loan EMIs and boost investment.
