The RBI has decided to increase the repo rate by 25 basis points to 6.25 per cent and now there is a chance that the interest rates will rise and this is happening after 4 and half years.
The six-member committee has taken a decision to this extent. This is also the first hike after the BJP came into power. This was the first rake hike being announced after the Modi led NDA government came into power in May 2014.
The repo rate is the rate at which the RBI lends short-term money to the banks. The central banks has also increased the reverse repo rate-the rate which the RBI borrows from the commercial banks to 6 per cent.
The investors who put money in the banks in the form of FDs will get some relief due to this change in the repo rate.