Yesterday RBI hiked REPO rate!!???
Can anyone post the meaning of REPO rates for a layman to understand!!??
Thanks....
Scraped from the
vestiges of the internet:
'In finance, "repo" means repurchase agreement, and the "repo rate" is the current interest rate for secured overnight or very short term secured financing involving the sale and repurchase of securities. Its how some securities positions are financed. "reverse repo" is the same transaction from the borrowers perspective.'
In short:repo and reverse repo rate are the rates at which the rbi lends to banks and banks park excess funds with the central
banks.
YMMV.
Sectors which are interest sensitive like banking, realty and auto stocks might be affected. A direct consequence might be that home loans might get dearer.