The Reserve Bank of India (RBI) has, for the sixth time, maintained the repo rate at 6.5% following the conclusion of the Monetary Policy Committee (MPC) meeting, as announced by Governor Shaktikanta Das. The decision was made during the last day of the bi-monthly review meeting of the MPC, which began on April 3, 2024. The RBI also kept the reverse repo rate and bank rate unchanged at 6.25% and 6.75%, respectively.
The repo rate, last altered in February 2023, has remained steady at 6.5%. This decision brings relief to borrowers as it implies no immediate impact on their loan equated monthly installments (EMIs).
The repo rate, a crucial economic term, refers to the rate at which the RBI lends money to commercial banks and other financial institutions. Alterations in the repo rate influence the availability of funds and borrowing costs in the financial market. When the repo rate is increased, financial institutions must pay higher interest to the RBI, making borrowing more expensive for them and, consequently, for their customers. Conversely, a reduction in the repo rate lowers borrowing costs, making loans more attractive and readily available.
The RBI’s decision to maintain the repo rate plays a significant role in shaping market interest rates and the availability of credit, impacting borrowers and lenders alike.
