India's Central Bank Raises Key Interest Rate
Listen to the story
The Reserve Bank of India (RBI) is the bank that controls money in India. It made a big decision this week.
The RBI put up its main interest rate. This is called the repo rate. The rate went up by 25 basis points. Now the repo rate is 5.5%.
This is the first time the RBI raised this rate in almost four years. The last big change was a long time ago.
The RBI made this choice because of inflation. Inflation means prices are going up. People must pay more money for food and other things.
Prices are rising because of a conflict in West Asia. This conflict is making oil and other goods cost more money.
A group called the MPC makes this decision. MPC means Monetary Policy Committee. These people meet and decide the interest rate.
When the repo rate goes up, banks must pay more to borrow money from the RBI. Banks then make loans more expensive for people too.
This can help control inflation. But it also means people may pay more for loans like home loans and car loans.
Many people in India are watching this news closely. It can change how much they pay every month.
Vocabulary7 words
- Reserve Bank of India
- the main bank that controls money for India
- repo rate
- the interest rate a central bank uses to lend money to other banks
- basis points
- very small units used to measure change in interest rates
- inflation
- when prices for things go up over time
- MPC
- a group of people who decide interest rates
- Monetary Policy Committee
- a group that decides money rules for a country
- home loans
- money that people borrow from a bank to buy a house
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Quiz
Answer key
1. Raised it by 25 basis points 2. 5.5% 3. True
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Fill-in-the-blank listening
Play the audio again and fill in the missing words as you listen.
The Reserve Bank of India put up its main interest rate, called the _____ rate.
The rate went up by 25 _____ points.
Now the repo rate is _____%.
This is the first time in almost four _____.
The RBI made this choice because of _____.
Inflation means _____ are going up.
Prices are rising because of a _____ in West Asia.
A group called the _____ makes this decision.
When the repo rate goes up, _____ must pay more to borrow money.
This can help control inflation, but people may pay more for _____.
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