RBI policy: Here is how a repo rate hike can affect your finances

If RBI increases the repo rate, the cost of borrowing by banks also rises, which subsequently makes taking loans from banks costlier

Reserve Bank of India (RBI), India's central bank is likely to hike repo rates again to quell inflation. The repo rate is the interest rate at which the RBI lends short-term funds to banks. After a small jump in May of 40 basis points (1 basis point= 1/100th of a per cent), RBI increased the interest rate two more times, totalling 140 basis points and taking the key repo rate to 5.40 per cent. This is in line with the US Federal Reserve, which has just delivered its third straight 75 basis point hike without showing any signs of slowing