The Reserve Bank announced just now that the repo rate increases with 75 basis points to 6.25%.
What does this mean?
The ‘repo rate’ is the rate at which the Reserve Bank lends to commercial banks. Between November 2021 and July 2022, the rate has increased five times, from 3.75% to 5.50% in the Bank’s bid to curb inflation. In turn, the interest rates hike increases the cost of credit: Households and businesses then have less disposable income as they use their money to service debt.
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