Now- a –days going anywhere and getting shocking by rising prices. Well this is inflation. Reporate – In simple terms inflation means
rise in prices. Such as a high increase in the price of Petrol, Milk, food items and other commodities .

So, to control this inflation in the country the central bank i.e. RBI (Reserve Bank of India) increased the Reporate. In
lay man terms “Reporate” means the rate at which RBI grants loans and money to the commercial banks so that the
inflation can be brought into control and hold can be brought on the cash flow of the economy.

It is same like commercial banks giving loans to the normal public. So, in this loan of RBI
to commercial banks, the commercial banks have to give up the gold, bonds, and assets as collateral security to RBI. So, what happens is the commercial banks due to increased rates grant loans to the common public at a higher rates of interest.

In May 2022 RBI issued the Repo Rate as 4.40%. Whereas previously it was 4.00%. So this 0.4% increase is to bring the
money flow under control in the economy.

So when inflation comes under control the central bank tries to reduce the rates.