A high repo rate is used to soak up money from the market when inflation rates are high. You may have heard the view that high policy rates are costing India its growth. A high policy rate also means high deposit rates, higher Public Provident Fund (PPF) rates and higher smaller saving rates. But don’t get ready to pop the bubbly as your loans don’t get any cheaper when policy rates are cut. You can celebrate the policy rate cut for one reason—that inflation has been tamed.

Source: Mint February 07, 2019 18:11 UTC