Repo rate
Also called: policy repo rate, policy rate
The interest rate at which the RBI lends to banks for short periods against government securities. It is the main tool of monetary policy.
Changes in the repo rate change banks' cost of short-term money, which passes over time into loan and deposit rates. Loans linked directly to a benchmark reset quickly; others adjust slowly. The RBI keeps a corridor of rates around the repo rate for emergency borrowing and for banks' surplus funds.
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- RBI monetary policyHow does the RBI try to control inflation, and how does it affect markets?
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