What is Repo Rate?
The interest rate at which a central bank lends to commercial banks — the anchor for loan rates.
The repo (or policy) rate is set by the central bank. When it rises, banks' borrowing costs rise and loan rates follow; when it falls, loans get cheaper. Floating-rate loans move with it.
Example
If the policy repo rate is 5.25%, floating home loans sit a few points above it.
What the repo rate is
The repo rate is the interest rate at which a country's central bank lends short-term funds to commercial banks. It is the central bank's main policy lever: raising it makes borrowing more expensive to cool inflation, while cutting it makes credit cheaper to support growth.
How a repo change reaches you
The repo rate anchors the whole rate structure. When it moves, banks re-price loans and deposits: floating-rate and benchmark-linked loans re-set higher or lower, and savings and fixed-deposit rates follow. That is why a central-bank decision on the repo rate directly affects your mortgage payment and your deposit returns.