Reserve Bank of India‘s economic policy was announced on Friday. For the 11th time in a row, the Federal Reserve has not changed its key interest rates. At 4%, the Repo rate remains unchanged. Likewise, the MSF rate and the Bank rate remain at 4.25%. Reverse repo rates remain at 3.5%.
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However, the governor of the RBI expressed concern about inflation. According to Das, the repo rate remains at 4 percent for the time being. Increasing the flow of credit will alleviate the pressure on the economy caused by the pandemic.
According to the RBI Governor, the Indian economy is slowly recovering from the pandemic-induced slowdown. Crude oil prices remain elevated globally. Economic conditions are satisfactory due to large foreign exchange reserves; The Reserve Bank is fully prepared to ‘rescue’ the economy. India’s RBI governor said that the country is walking on a different path than other countries in the world.
Among major economies, India will grow at the fastest rate according to the IMF. A massive vaccination program and continued financial and monetary support will lead to this recovery.
What is Repo Rate
This is how you can understand the repo rate. We take out loans from banks, and we must pay interest. The Reserve Bank of India (RBI) provides banks with loans to run their daily operations, which are similar to the banking industry. Whenever the Reserve Bank loans money to the banks, it charges interest at a rate called the Repo Rate.
The impact of repo rates on the common man
By borrowing at low-interest rates, banks are able to offer cheap loans to their customers, since their repo rate will be low. A higher repo rate would make it more difficult for banks to offer loans, which would increase the cost of loans for customers.