Repo Rate
Definition
The rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. An increase in Repo Rate makes borrowing costlier for banks, reducing money supply and inflation; a decrease stimulates borrowing and growth.
Example
"When RBI raises the Repo Rate from 6% to 6.5%, banks' borrowing cost rises, prompting them to raise lending rates. Home loans become costlier, reducing demand and curbing inflation."