Repo rate today

What is Repo rate ?

Repo rate is the rate at which Reserve bank of India lends money to commercial banks (likes SBI, HDFC, ICICI) in the event of any shortfall of funds. Repo rate is used by monetary authorities as a tool to control inflation.

Repo rate today is 6.25% as per 7th December 2022 update

In India, the RBI uses the repo rate as the main instrument for short-term monetary policy. The repo rate is the rate at which banks borrow money from the RBI for a period of up to 14 days.

A higher repo rate makes it more expensive for banks to borrow money from the RBI. This ultimately leads to higher interest rates for consumers and slower economic growth.

A lower repo rate, on the other hand, makes it cheaper for banks to borrow money from the RBI. This, in turn, leads to lower interest rates for consumers and faster economic growth.

The RBI recently changed the repo rate from 6.25% to 6.50%. This is the first time in about 10 years that the RBI has increased the repo rate. The RBI cited inflationary pressures as the main reason for the increase.

What does this mean for you?

If you have a home loan, car loan or personal loan, your EMIs are likely to go up. If you are planning to take a loan, the interest rates are likely to be higher.

However, the RBI has also said that banks are free to offer loans at lower interest rates. So, it is advisable to shop around for the best deal before taking a loan.

If you have a fixed deposit, the interest rate is likely to go up. Many banks have already increased the interest rates on fixed deposits.

If you are a saver, this is good news. With interest rates on deposits going up, you will earn more on your savings.

If you are an investor in the stock market, the RBI’s decision is likely to have a positive impact. A higher repo rate usually leads to a fall in stock prices as it increases the cost of borrowing for companies. This, in turn, reduces their profits. However, the RBI’s decision to increase the repo rate is not likely to have a significant impact on the stock market, as the increase was widely expected.

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