RBI Hikes Repo Rate - How Will It Impact You?
What is Repo Rate?
Repo rate is the rate at which RBL lends money to financial institutions.
Why Does RBI Increase the Repo Rate?
The Monetary Policy Committee (MPC), headed by the RBI governor, increases the repo rate to combat inflation.
Why is the Interest Rate Different From the Repo Rate?
The repo rate is the basic rate at which RBI lends money to financial institutions. To this, the institutions add their marginal charge and offer interest rates.
How Will an Increase in the Repo Rate Impact You?
1. Increased Borrowing Cost
When the repo rate increases, the lending cost for financial institutions increases, leading to higher loan interest rates.
2. Increased EMI
Increased interest rates translate into increased EMIs.
3. Benefit for Investors
If you have fixed deposits and short-term savings, you might benefit from higher return rates.
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