New Delhi, April 12 -- The repo rate is the Reserve Bank of India's magic wand-a powerful tool that influences everything from your loan EMI to how expensive your groceries are.

Let's break it down: "Repo rate" stands for Repurchasing Option Rate-the interest that commercial banks pay RBI when they borrow funds, usually overnight, and hand over government securities as collateral. The lower the rate, the cheaper it is for banks to borrow for their operations, primarily lending. And just like that, RBI controls how much money is sloshing around in the system.

Whenever RBI feels the economy needs a boost, it slashes the repo rate. This makes it easier (and cheaper) for banks to lend money, which means more cash in circulation, more spendi...