How Will RBI's Repo Rate Hike Impact the Economy? Repo Rate |EMIs and Loan Tenure Increase| Sana Ram
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The Reserve Bank of India (RBI) is the central bank of India and is responsible for implementing the country’s monetary policy. One of the key tools it uses to manage the economy is the repo rate, which is the interest rate at which the RBI lends money to commercial banks. When the RBI increases the repo rate, it becomes more expensive for banks to borrow money, which can impact the economy in several ways.
First, a higher repo rate can lead to higher interest rates for consumers, which can make it more expensive to borrow money for things like home loans or car loans. This can dampen consumer spending, which can have a negative impact on economic growth.
Second, higher interest rates can also make it more expensive for businesses to borrow money, which can make it harder for them to invest in new projects or expand their operations. This can reduce economic activity and slow down growth.
Overall, a repo rate hike by the RBI can have a negative impact on the economy, at least in the short term.
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