The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent on Wednesday. It was the first rate hike in nearly four years. Here is what the move means for you.

The repo rate is the rate at which the RBI lends money to banks. When it rises, banks pay more to borrow. They usually pass the cost to customers through higher loan rates. Home loan and car loan EMIs may go up in the coming weeks.

Savers may benefit. Banks often raise fixed deposit rates after a repo hike. If you keep money in FDs, you could earn slightly more interest. But higher rates also make borrowing costlier for businesses.

The RBI acted because inflation is rising and growth is strong. Oil above $101 a barrel is pushing up prices. The central bank also changed its stance to calibrated tightening. This signals more hikes may come. Analysts expect another 25 basis point rise in December.