RBI December MPC meet begins: Repo rate, growth outlook, and more

After slashing repo rates for three consecutive months since February, the MPC kept the rate unchanged at 5.5 per cent since August

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The Reserve Bank of India's (RBIs) rate-setting body, the Monetary Policy Committee (MPC), began its bi-monthly meeting on Wednesday, December 3. After slashing repo rates for three consecutive months since February, the MPC kept it unchanged at 5.5 per cent since August.

 

The MPC meeting that starts today will last two days, with the rate decision to be announced on Friday, December 5.

 

Let's take a look at what MPC is, what the expectations are from the December MPC meeting and what has changed since the last policy meeting.

What is the Monetary Policy Committee?

The MPC is a rate-setting body formally established by the RBI in 2016 under the RBI Act, 1934. It was created to ensure greater transparency and collective decision-making in India’s monetary policy. The first MPC meeting was held in October 2016.

What is the RBI MPC's role?

It is tasked with deciding the repo rate, which is the rate at which the RBI lends to commercial banks. Adjustments to the repo rate help the central bank control inflation and growth. The committee’s main objective is to maintain annual inflation at 4 per cent ± 2 per cent and support economic growth. 

December 2025 MPC members

The committee consists of six members. While three members of the committee are RBI officials, the remaining three are appointed by the government. Sanjay Malhotra, governor of RBI, serves as the ex officio chairperson of the committee.

 

Other members on the committee include:

• Indranil Bhattacharyya, executive director in charge of monetary policy
• Poonam Gupta, deputy governor in charge of monetary policy
• Saugata Bhattacharya, economist
• Ram Singh, director, Delhi School of Economics
• Nagesh Kumar, director & CEO, Institute for Studies in Industrial Development (ISID)

October 2025 RBI MPC highlights

In the last MPC meeting held between September 29 and October 1, the RBI monetary policy committee announced the following:

 

Repo rate: The repo rate was kept unchanged at 5.5 per cent in October, after three consecutive cuts since February. Here's how the rates have changed so far this year:

• February: 25 bps cut
• April: 25 bps cut
• June: 50 bps cut
• August: No change
• October: No change

Growth: The rate-setting body revised its growth forecast for FY26 upward to 6.8 per cent. The quarterly growth forecasts are:

• Q1 FY26: 7.0 per cent
• Q2 FY26: 6.4 per cent
• Q3 FY26: 6.2 per cent
• Q4 FY26: 6.4 per cent

Inflation: In October, the MPC lowered the overall inflation forecast for FY26 to 2.6 per cent. The quarterly inflation forecasts are:

• Q2 FY26: 2.6 per cent
• Q3 FY26: 1.8 per cent
• Q4 FY26: 1.8 per cent
• Q1 FY27: 4.5 per cent

Stance: The committee also maintained its policy stance at ‘neutral’, signalling that future moves will depend on inflation and growth dynamics.

What has happened since last policy meet?

A lot has changed since the October MPC meeting. While US tariffs continue to remain in effect, the gross domestic product (GDP) growth surpassed expectations in both the June and September quarters. India's GDP grew 8.2 per cent in the July-September quarter (Q2) of FY26, following a 7.8 per cent rise in the June quarter.

 

Even the retail inflation, measured by the Consumer Price Index (CPI), cooled to 0.25 per cent in October due to record-low food prices and the impact of the recent Goods and Services Tax (GST) cuts, which eased prices across several sectors.  

 

However, PMI is showing signs of easing. The manufacturing PMI fell to 56.6 in November, from 59.2 in October, according to the data compiled by S&P Global. The data signalled the weakest improvement in operating conditions in nine months since February.

What to expect from December MPC meet?

Economists believe that the December policy, framed against the backdrop of resilient growth and extremely low inflation, turned the decision into a close call between a cut and a pause. They said the six-member committee will maintain the status quo on its stance in the December policy meeting.

 

According to a poll conducted by Business Standard, most economists expect the MPC to keep the repo rate unchanged on the back of strong GDP growth. Seven out of twelve respondents said no rate cut will be announced on Friday.