The Reserve Bank of India (RBI) cut its repo rate by 25 bps to 5.25% and announced measures to inject up to $16 billion into the financial system, aiming to support growth amid record-low inflation.
Key Liquidity Measures
- ₹1 trillion rupees ($11.1B) in open-market bond purchases on Dec 11 & Dec 18
- $5B USD-INR buy/sell FX swap on Dec 16
- Repo rate now at 5.25%, with policy stance remaining “neutral”
Market Impact
- Analysts say the liquidity injection is growth-supportive and may leave room for another rate cut.
- This marks the first OMO auction since May, when RBI bought ₹4.84 trillion in bonds.
- FX swaps follow similar $10B operations in Feb & Mar.
Economists note the actions signal RBI’s focus on stabilizing G-sec yields and managing FX risks, while maintaining policy flexibility.