Repo Rate
Also known as: Repurchase Rate, Policy Rate
Rate at which RBI lends money to commercial banks against government securities as collateral.
Detailed Explanation
Repo Rate (Repurchase Rate) is RBI's key policy rate used for monetary policy transmission. When RBI wants to increase money supply (accommodate growth), it cuts repo rate. When it wants to control inflation, it raises repo rate. Since 2019, most new loans are linked to repo rate through external benchmarks like RLLR, ensuring faster transmission of monetary policy to borrowers. Current repo rate decisions directly impact loan EMIs for borrowers on external benchmarks.
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