How Repo Rate Changes Affect Stock Market Trends and Investor Sentiment

Description

Repo rate is the rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks in exchange for government securities. It plays a crucial role in controlling inflation, liquidity, and overall economic growth. Key pointers include:

Monetary Policy Tool: Used to regulate money supply and inflation.
Impact on Loans: Changes in repo rate affect loan interest rates and EMIs.
Economic Stability: Helps maintain financial stability during economic fluctuations.

Banks adjust their lending rates based on RBI’s repo rate, directly affecting borrowers. The economy's liquidity and loan affordability depend on the repo rate.