Policy Rate Comparison Across BRICS, US and Other Economies After 25 Bps Cut in India

At 5.25%, India’s policy rate is higher than the US, UK, and Eurozone, but much lower than Brazil and Russia, which still maintain double-digit rates to combat inflationary pressures. India’s Central Bank recently reduced the policy rate by 25 basis points to 5.25% during the latest Monetary Policy Committee meeting held from December 3 to 5. This cut brought the repo rate down from 5.50% to 5.25%. RBI Governor Sanjay Malhotra described the current economic climate as a ‘rare goldilocks period’ with inflation at 2.2% and growth at 8.0% in H1: 2025-26.
The standing deposit facility rate under the liquidity adjustment facility has been adjusted to 5.00%, while the marginal standing facility rate and Bank Rate are at 5.50%. The MPC maintained a neutral stance. The repo rate, the interest rate at which banks borrow from the RBI, plays a crucial role in determining borrowing costs. When the repo rate is lowered, banks can access funds more affordably, stimulating lending and economic growth.
Central banks worldwide use policy rates as a key tool to regulate money flow and manage economic growth. Countries aim to strike a balance between sustaining growth momentum and curbing inflation effectively. India’s policy rate aligns with developed economies like the US and UK but remains significantly lower compared to BRICS nations. For example, Brazil and Russia boast double-digit policy rates of 15% and 16.50%, respectively, aimed at combating high inflation rates.