Recently, the inflation rate for India’s economy was announced, shocking ministers, experts, and laymen alike. In October, India recorded an inflation of 0.25%, down from 1.4% in September. This inflation is very low and could negatively affect the economy. Keeping that in mind, the Reserve Bank of India has announced a 0.25 basis point cut in its repo rates. The RBI has also decided to conduct open market operations of 1 trillion rupees or $11.14 billion and $5 billion in forex swaps to add liquidity and speed up transmission of lower rates.
This was approved by a six-member monetary policy committee, which voted unanimously to lower the repo rate to 5.25%. It’s worth noting that repo rates have been cut by a total of 125 basis points, or 1.25%, since February 2025, citing lower inflation.
The governor of the Reserve Bank of India, Sanjay Malhotra, said in a video that the Indian economy is facing a “rare goldilocks” period. He also said that since October, the Indian economy has seen rapid disinflation, leading to a breach of the threshold set by India’s central bank, and that growth had remained strong.
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Rapid disinflation can make the economy stagnant and create long-term complications. Lower repo rates will have a domino effect, increasing lending, pumping money back into the Indian economy and setting the inflation in that sweetspot. However, independent analysts expect inflation to remain soft in the coming months.
