In a surprise move, the RBI has hiked the Repo Rate (the rate at which commercial banks borrow money by selling their securities to the RBI to maintain Liquidity) by 40 bps to 4.40% on 04/05/2022. Along with the hike in Repo Rate, RBI has also increased the Cash Reserve Ratio (CRR – The % of a bank’s total deposit maintained with the Central Bank) by 50 bps to 4.50%. The hikes in Repo Rate and CRR will drain around 87,000/- crore of liquidity from the banking system. The RBI controls inflation (Inflation = When too much money chasing too few goods) by increasing …