{"id":32041,"date":"2026-10-07T10:35:40","date_gmt":"2026-10-07T05:05:40","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=32041"},"modified":"2026-10-07T10:38:34","modified_gmt":"2026-10-07T05:08:34","slug":"repo-rate","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/repo-rate\/","title":{"rendered":"Repo Rate, Meaning, Importance, Impact, Current Rate, Latest News"},"content":{"rendered":"<h2><b>Repo Rate News<\/b><\/h2>\n<p data-pm-slice=\"1 1 []\"><strong>Reserve Bank of India (RBI)<\/strong> conducted its latest <strong>Monetary Policy Committee (MPC)<\/strong> meeting from <strong>October 5 to 7, 2026<\/strong>, under the chairmanship of RBI Governor <strong>Sanjay Malhotra<\/strong>. In its latest policy decision announced on <strong>October 7, 2026<\/strong>, the MPC <strong>raised the repo rate by 25 basis points from 5.25% to 5.50%<\/strong>. This was the first repo rate hike by the RBI since <strong>February 2023<\/strong>.<\/p>\n<h2><b>Basis Points Meaning<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Basis points (bps) are a standard financial unit used to measure small changes in interest rates, yields, or other percentage-based values.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They provide precision when expressing movements in financial indicators. For example, a 25 bps hike means a 0.25% increase.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Basis points are widely used to describe changes in interest rates on loans, savings, bonds, and other financial instruments, ensuring clarity where even minor shifts matter.<\/span><\/li>\n<\/ul>\n<h2><b>RBI Repo Rate<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The repo rate is the interest rate at which the <a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/reserve-bank-of-india\/\" target=\"_blank\"><strong>RBI<\/strong><\/a> lends short-term funds to commercial banks against government securities.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It serves as a primary tool for the RBI to regulate liquidity, control inflation, and influence overall economic activity.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By adjusting the repo rate, RBI can either encourage banks to borrow more (by lowering the rate) or discourage borrowing (by raising the rate), thus influencing the money supply in the economy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The reverse repo rate is the interest rate at which the central bank (such as the RBI) borrows surplus funds from commercial banks, thereby absorbing excess liquidity from the system.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It is the opposite of the repo rate, where commercial banks borrow from the central bank.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Also Read: <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/rbi-monetary-policy-2025\/#:~:text=RBI%20Monetary%20Policy%202025%20reduces,stance%20and%20ensuring%20inflation%20control.\" target=\"_blank\">RBI Monetary Policy 2025<\/a><\/strong><\/p>\n<div>\n<div>\n<div>\n<div>\n<div>\n<div>\n<h2><strong>Impact of Increased Repo Rate<\/strong><\/h2>\n<p>An <strong>increase in the RBI repo rate<\/strong> makes borrowing costlier for banks, which can lead to higher interest rates for consumers and businesses.<\/p>\n<ul>\n<li><strong>Loans become expensive:<\/strong> Home, auto and personal loans may become costlier, especially floating-rate loans.<\/li>\n<li><strong>EMIs may increase:<\/strong> Existing borrowers with floating-rate loans may face higher EMIs or a longer repayment period.<\/li>\n<li><strong>Inflation may decline:<\/strong> Higher borrowing costs reduce spending and demand, helping the RBI control inflation.<\/li>\n<li><strong>Economic growth may slow:<\/strong> Costlier credit can reduce consumption, investment and business expansion.<\/li>\n<li><strong>Savings may increase:<\/strong> Banks may offer higher interest rates on fixed deposits and other deposits, encouraging savings.<\/li>\n<li><strong>Credit growth may slow:<\/strong> Higher interest rates can reduce demand for bank loans.<\/li>\n<li><strong>Investment may decline:<\/strong> Businesses may postpone expansion and investment projects due to higher financing costs.<\/li>\n<li><strong>Rupee may strengthen:<\/strong> Higher interest rates can make Indian assets relatively more attractive to investors, potentially supporting the rupee.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>RBI hikes repo rate to 5.50% by 25 bps in October 2026. Know the latest RBI MPC update, reverse repo rate, basis points meaning and economic impact of the rate hike.<\/p>\n","protected":false},"author":27,"featured_media":76624,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[786],"tags":[21,22,23],"class_list":["post-32041","post","type-post","status-publish","format-standard","has-post-thumbnail","category-general-studies","tag-prelims-pointers","tag-upsc-current-affairs","tag-upsc-prelims-current-affairs","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=32041"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32041\/revisions"}],"predecessor-version":[{"id":127855,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32041\/revisions\/127855"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/76624"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=32041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=32041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=32041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}