RBI Interest Rate Decision
- Location: India
- Currency: INR
This event starts in:
The RBI Interest Rate Decision is made by the Bank’s Monetary Policy Committee six times a year.
The basic rate, or repo, is the interest rate at which the Reserve Bank of India issues short-term loans to Indian commercial banks. When the repo rate increases, loans become more expensive. As a rule, the reserve bank cuts the rate when there is a need for an expansion in the country’s banking sector and the economy as a whole.
To fight inflation, the RBI may raise the interest rate. Loans becomes more expensive for commercial banks, which then increase the cost of loans for their clients, and thus borrowing across the economy becomes more expensive. This leads to a decrease in issued loans and in consumption. This, in turn, will lead to lower inflation.
If the announced repo rate is higher than expected, this can be seen as positive for the Indian rupee. A lower than expected rate can have a negative effect on the INR quotes.
