Reserve Bank of India will announce its bi-monthly Monetary Policy today. Experts believe that RBI is likely to increase the repo rate by 25 to 50 basis points to check retail inflation. Repo rate refers to the rate at which commercial banks borrow money from the Reserve Bank.
If the central bank increases repo rate, the cost of borrowing for retail and other loans by the banks also goes up. Banks will pass on the rising cost to the borrowers by hiking the interest rates of loans. RBI has raised repo rates twice since May this year to 90 basis points. (AIR NEWS)