The RBI's repo rate impacts the interest rates banks charge for loans and the rates they set for investments like fixed deposits. It acts as a guide for banks on the interest rates they should offer.

The RBI's MPC, in a unanimous decision, lowered the repo rate in a bid to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment.

After nearly five years, the RBI has cut the repo rate, bringing relief to home loan borrowers and expected to ease borrowing costs.