What is Repo Rate?
The repo rate is the interest rate at which the RBI lends money to commercial banks — the primary tool for controlling inflation and economic growth in India.
Formula
Set by RBI's Monetary Policy Committee (MPC) every 2 months
How to Interpret
Lower repo rate = cheaper borrowing = stimulates growth but may increase inflation. Higher repo rate = controls inflation but slows growth.
Typical Ranges
Historically 4-8% in India. Current rate drives bank lending rates and bond yields.