The current policy repo rate set by the Reserve Bank of India (RBI) is 6.50%.

The policy repo rate is the rate at which the central bank lends money to commercial banks for a short term, typically overnight. It is an important tool used by the central bank to control inflation and stimulate economic growth. The repo rate serves as a benchmark for interest rates in the economy.

Importance of the policy repo rate:

- The policy repo rate is a key tool used by the RBI to manage inflation. By increasing the repo rate, the RBI aims to reduce liquidity in the market and make borrowing more expensive. This helps in controlling inflationary pressures in the economy.
- On the other hand, if the RBI wants to stimulate economic growth, it can reduce the repo rate. This lowers the cost of borrowing for banks, encouraging them to lend more to businesses and individuals. This increased liquidity in the market can boost investment and consumption, leading to economic growth.

Factors influencing the policy repo rate:

- Inflation: One of the main factors considered by the RBI when deciding the repo rate is the inflation rate. If inflation is high or expected to rise, the RBI may increase the repo rate to curb inflationary pressures.
- Economic Growth: The RBI also takes into account the state of the economy when determining the repo rate. If the economy is experiencing a slowdown, the RBI may lower the repo rate to stimulate growth.
- Global Factors: External factors such as global economic conditions, oil prices, and exchange rates also influence the repo rate. Changes in these factors can have an impact on inflation and growth prospects in India.

Impact of the repo rate on the economy:

- Borrowing Costs: Changes in the repo rate directly affect the interest rates charged by commercial banks on loans and deposits. When the repo rate is increased, banks may raise their lending rates, making borrowing more expensive for businesses and consumers.
- Investment and Consumption: Lower repo rates encourage borrowing and investment, as the cost of borrowing decreases. This can lead to increased business investment, job creation, and consumer spending, thereby stimulating economic growth.
- Exchange Rates: Changes in the repo rate can also impact exchange rates. Higher repo rates can attract foreign investors looking for higher returns, leading to an appreciation in the currency. Conversely, lower repo rates may lead to a depreciation in the currency as foreign investors seek higher returns elsewhere.

Overall, the current policy repo rate set by the RBI at 6.50% reflects the central bank's assessment of the prevailing economic conditions and its objective of maintaining price stability while supporting economic growth.