The RBI is expected to raise its repo rate to 5.50 percent this week. Here is what that means and why it matters for you.The repo rate is the interest the RBI charges banks for short-term loans. When it rises, banks usually raise lending rates, so home and car loans get costlier.A 25-basis-point hike would be the first increase since February 2023.

In a September Reuters poll, 35 of 61 economists backed the move, with most seeing one more hike in December.The trigger is inflation. Consumer prices rose 4.82 percent in August, above the RBI’s 4 percent target for the third straight month. Energy and food costs are driving the rise.Growth gives the RBI cover.

The economy grew nearly 8 percent in the April-June quarter, and bank credit jumped more than 19 percent. The central bank would rather slow demand than let inflation take hold. The committee meets from October 5 to 7.

An announcement is expected at the end of the three-day review.