Reading the Rate Cycle — RBI, Repo & What Moves

Every couple of months a headline flashes across the news: *"RBI holds the repo rate,"* or *"RBI cuts by a quarter point."* The anchor sounds serious. Somewhere a graph goes up or down. And for most people watching, the honest reaction is a small, quiet panic: is this good or bad for me — and am I supposed to do something?

Three people in this course hear that same headline and feel three different versions of the worry. Lakshmi, 64, a retired schoolteacher in Hyderabad, lives off her savings — she needs about ₹50,000 a month and wonders whether a rate cut is quietly shrinking her income. Harpreet, 53, a shopkeeper in Ludhiana with about ₹3,00,000 in fixed deposits, notices his FD renewal offers keep getting a little lower and can't tell if he's being cheated or if it's just "the times." Suresh, 55, in Kochi, opened his mutual-fund app one morning to find his "safe" debt fund had dropped, and thought: *I bought a bond fund to avoid this.*

Here is the reassurance to hold onto before we start: you do not need to become a trader, an economist, or a forecaster. You will never out-guess the RBI, and you don't have to. This lesson gives you something calmer and more useful — a mental model of the *rate cycle* — the long, slow wave of interest rates rising and falling — that lets you look at any RBI headline and know, in plain terms, what it means for your FD, your loan, and your bonds, and (almost always) that the right move is small or none at all.

By the end you'll understand the one number the RBI actually sets, why bond prices move opposite to rates, and what — if anything — Lakshmi, Harpreet, and Suresh should each do. Let's disarm it piece by piece.

Start with the word itself. The repo rate is the interest rate at which the Reserve Bank of India (the RBI — the country's central bank) lends short-term money to ordinary banks against government securities. "Repo" is short for *repurchase agreement*: a bank hands the RBI some government bonds, takes cash overnight, and buys the bonds back the next day for slightly more — that "slightly more" is the repo rate. As of the RBI's latest policy meeting (June 2026), the repo rate is 5.25%.

Why does this one wholesale rate matter to you at all? Because it sets a bank's own cost of money. If a bank can borrow at 5.25%, it will not pay *you* 8% on a deposit or lend to a homebuyer at 5% — it would lose money. So the repo rate is the anchor from which almost every other rate in the economy is priced: cheaper for banks to borrow → cheaper loans and lower deposit rates flow out; costlier for banks → the opposite. Think of it as the tide. You don't feel the tide directly, but every boat in the harbour — your FD, your EMI, the return on a bond — rises and falls with it.

Check: the repo rate is the RBI's rate to banks (currently 5.25%), not the rate you personally earn or pay. Everything else in this lesson hangs off that one distinction.

The repo rate doesn't change on a whim. It is set by the Monetary Policy Committee (MPC) — a six-member committee (three from the RBI, three external experts) that meets roughly every two months and votes. Their job, in one line, is RBI monetary policy: using the repo rate to keep inflation low and steady without needlessly choking off growth. That single tool, pointed at two goals that often pull in opposite directions, is the whole drama.

The MPC has a legally fixed inflation target: 4% CPI, with a tolerance band of 2% to 6%. (CPI — the Consumer Price Index — is the standard measure of how fast everyday prices are rising; you met inflation back in Lesson 1 · *Why Idle Cash Loses*.) The rule of thumb behind their vote is simple:

• Inflation running hot (prices rising too fast)? Hike. A higher repo rate makes borrowing costlier, cools spending and demand, and pulls prices back toward 4%.
• Growth weak, inflation tame? Cut. A lower repo rate makes borrowing cheaper, encourages spending and investment, and supports jobs and growth.
• Both risks balanced, or uncertain? Hold — and signal a *stance* (whether the next move is more likely up, down, or on pause).

Right now you can watch that balancing act live. The MPC held the repo at 5.25% in June 2026 with a neutral stance. Why hold, rather than keep cutting? Because the two forces are pulling against each other: growth has softened (which argues for a cut), but inflation has crept back up to 4.38% as of June 2026 — still inside the 2–6% band, but now *above* the 4% target and rising (which argues against one). When the signals conflict like this, the committee waits and watches. That, in miniature, is monetary policy: not a lever someone yanks for fun, but a careful response to what prices and growth are doing.

Check: the MPC cuts to help growth, hikes to fight inflation, and aims for 4% CPI (2–6% band). Today it's paused/neutral because those two pressures are roughly balanced — soft growth against firming inflation.

So the MPC changes one wholesale rate. How does that actually reach the FD in Harpreet's passbook or the EMI on someone's home loan? Through a chain economists call monetary transmission — the pass-through from the repo rate, out through the banking system, into the prices you personally pay and earn. The diagram below traces it.

The crucial, practical thing the diagram shows is that transmission is not instant and not even. It moves at different speeds down different pipes:

• Your home/personal loan EMI — fast. Since 2019 most floating-rate retail loans are legally linked to an external benchmark (usually the repo rate itself), called the EBLR — External Benchmark Lending Rate. When the repo moves, these loans re-price within a quarter. This is why a borrower's EMI can jump almost immediately after a hike — and drop soon after a cut.
• Bond and G-sec (government-security) yields — fast, often ahead. The market that trades government bonds re-prices continuously and often moves *before* the RBI, anticipating the decision. (A bond's *yield* — its return at today's price — is the number that shifts; we unpack it two sections on.) You'll see this in the seesaw shortly.
• Your FD rate — slower, partial. Banks re-price new deposits at their own pace and rarely pass on the full move. An FD you already booked doesn't change at all — it pays what it promised until maturity (this is exactly Harpreet's story later).
• Your savings-account rate — slowest, stickiest. It has sat near 2.7% through hikes and cuts alike; banks move it least of all.

Hold that asymmetry in mind, because it's the source of a lot of confusion: after an RBI cut, a borrower feels relief quickly while a saver's pain arrives slowly and only on *new* money. Same headline, opposite effects, different speeds.

The repo rate is never a single fact frozen in time — it moves in long, slow waves called the rate cycle. In an easing phase the RBI cuts, step by step, usually to revive slowing growth. In a tightening phase it hikes, step by step, to beat back inflation. These phases last years, not weeks, and knowing roughly where you are in the wave is most of what "reading the cycle" means.

Here is the wave India is riding right now. The RBI had held the repo at its cycle peak of 6.50% all through 2023 and 2024 — a long plateau at the top. Then, in February 2025, it began an easing cycle:

Read that as a story, not a spreadsheet. Over 2025 the RBI cut a cumulative 1.25 percentage points (from 6.50% down to 5.25%) — that's "−125 basis points," where a *basis point* is one-hundredth of a percent, the unit rate-watchers count in. It has now held steady for three meetings in a row. So we are near the bottom of an easing cycle that looks essentially done for now — rates fell a long way and have paused, with the next move genuinely data-dependent (inflation ticking up could even argue for a hike down the line). The timeline below places us on the wave and marks the window that matters most for a retiree.

Notice the shaded band on the left of the timeline: 2023–24, when the repo sat at its 6.50% peak. That was the golden window to lock in a high fixed rate for years — and, as we'll see with Lakshmi, it's mostly passed for market rates, though not entirely gone. Check: we are late in an easing cycle, paused near the low, after 125 bps of cuts — not at a peak.

To see why the rate cycle reshapes bonds, you need one term that people constantly muddle: yield. A bond has a fixed *coupon* — the rupee interest it promises each year, set when it was issued. But a bond can be bought and sold, and its price moves. The yield is what a bond actually earns *for someone buying it at today's price* — the annual return baked into that price. Coupon is fixed forever; yield floats with the price.

Yield is also how you compare bonds to everything else safely. Back in Lesson 1 · *Why Idle Cash Loses*, we called the yield on a government bond the risk-free rate — the return you can earn with essentially no risk of not being paid back, because the government stands behind it. Today the benchmark 10-year G-sec (government security) yields about 6.76%. That number is your anchor: it's the reward for lending to the safest borrower in the country for ten years, and it's the bar any riskier product must clear to be worth the extra risk. Keep that 6.76% in your pocket — it will judge a scam for us later.

Check: coupon = the fixed rupee interest a bond promises; yield = what it earns at today's price. The 10-year G-sec (~6.76%) is the risk-free yardstick for everything else.

Now the idea that surprises almost everyone the first time, and the reason Suresh's "safe" fund fell. It's called the price–yield seesaw: when market interest rates go up, the prices of bonds already out there go down — and when rates go down, existing bond prices go up. Price and yield sit on opposite ends of a seesaw; push one up and the other drops. The picture makes it stick:

Let's put real rupees on it. Take Suresh's ₹1,00,000 government bond paying a 7% coupon — ₹7,000 a year — with 10 years left to run. (7% is close to the ~6.94% coupon on today's 10-year benchmark; we round it to keep the arithmetic clean. These figures are illustrative.)

So a 1-point rise in rates knocks about 6.7% off the market price of that bond — from ₹1,00,000 to roughly ₹93,290. A 1-point fall lifts it about 7.4%, to roughly ₹1,07,360. The coupon never changed; Suresh still gets his ₹7,000 a year and his ₹1,00,000 back at maturity. Only the *resale price today* moved. That gap between "what it's worth if I sell now" and "what I still collect if I hold" is the whole key to not panicking — which we'll unpack in the next two sections. Check: rates up → existing bond price down; rates down → price up. Fixed coupon, moving price.

The seesaw isn't a rule someone invented; it falls straight out of common sense. Picture the moment rates rise from 7% to 8%. Brand-new bonds now pay ₹8,000 a year on ₹1,00,000. Suresh is holding an old one that pays only ₹7,000. If he wanted to sell it, why would any buyer pay him a full ₹1,00,000 for ₹7,000 of income when the same ₹1,00,000 buys ₹8,000 next door?

They wouldn't. The buyer will only pay a discount — a price low enough that Suresh's fixed ₹7,000 works out to the new going yield of 8% for them. That price is about ₹93,290. The market isn't punishing Suresh's bond; it's simply re-pricing a fixed income stream against a world where money now earns a little more. When rates *fall* to 6%, the logic reverses: his 7% bond suddenly looks generous, buyers compete for it, and its price rises to about ₹1,07,360. The bond's price always adjusts so that a fresh buyer earns whatever the current going rate is.

This is why Suresh's debt-fund dip is not the disaster it felt like at 8 a.m., and why, later, we'll tell him and everyone else the same thing: don't sell a good bond or bond fund *into* a rate-driven dip. Check: the price moves so a new buyer earns the current rate; if you hold, the paper dip is not a loss.

One more piece and the machinery is complete. You've seen that a 10-year bond drops about 6.7% when rates rise a point. Does *every* bond drop by the same amount? No — and the reason is duration. For now, hold the simplest possible version of the idea: the longer a bond has left until it matures, the more its price swings when rates move. A bond you get your money back from soon is barely affected; a bond that locks in a fixed coupon for decades is affected a lot.

Same ₹1,00,000 bond, same 7% coupon, same 1-point rise in rates — but different maturities. Watch the price fall grow as the maturity lengthens:

A 2-year bond loses only about 1.8% (₹98,217); the 10-year loses 6.7% (₹93,290); a 30-year loses about 11.3% (₹88,742) — six times the short bond's move, from the very same rate change. The intuition: with the 30-year bond you're stuck earning the old, now-below-market coupon for three whole decades, so the market discounts it harder. With the 2-year, you're back to cash soon and can re-lend at the new higher rate, so little is lost.

Check: longer maturity → bigger price swing for the same rate move. Short bonds are steadier; long bonds are more rate-sensitive.

Now the payoff, one person at a time. Lakshmi is 64, widowed, retired, with a ₹95L corpus and a need for about ₹50,000 a month to live on. She isn't building wealth any more; she's drawing income from it. For her, the rate cycle isn't abstract — it sets how much safe income her money can throw off, and a falling cycle is a slow leak in her monthly cheque.

The principle for someone in her position is simple: near a rate peak, lock a high fixed rate in for as long as you can — before the cuts arrive. A fixed-rate instrument booked today keeps paying today's rate for its whole term, even as the RBI cuts and new savers get less. The catch, as we saw, is *where we are in the cycle.* The 6.50% peak of 2023–24 has passed; rates have already fallen, and today's market safe rates are lower — the 10-year G-sec is ~6.76%, a top bank FD ~6.95%. If she was hoping to catch the very top, that ship has largely sailed.

Put rupees on it. Say Lakshmi places ₹30,00,000 of her corpus into safe income (SCSS is capped at exactly ₹30 lakh, so this fits). Look what the same money earns depending on where she puts it — all illustrative, at today's confirmed rates:

The SCSS lock earns her about ₹37,500 a year more than a fresh top FD on the identical ₹30,00,000 — and roughly ₹1,65,000 a year more than leaving it idle in savings. More importantly, locking the 8.2% *now* means she keeps 8.2% for five years even if rates fall further; that ₹20,500 a month is fixed against the cycle. It covers a solid slice of her ₹50,000 need, with her pension and other holdings filling the rest.

The complete decumulation playbook — how to *ladder* these across different maturities so she's never fully exposed to one moment in the cycle, plus sequence-of-returns risk and the systematic-withdrawal-plan (SWP) mechanics — is Lesson 51 · The Drawdown Years, with the specific instruments (SCSS, FRSB, tax-free bonds) detailed in Lesson 21 and Lesson 35. Here, the rate-cycle lesson is enough: lock a high fixed rate while you can; prefer fixed over floating when the goal is to secure income; and don't wait for a perfect top that may never come. Check: for Lakshmi, locking today's still-high administered rate protects her income against future cuts.

Harpreet, 53, runs a garment shop in Ludhiana and keeps about ₹3,00,000 in fixed deposits — his safe money, seven years short of retirement. He does the sensible-seeming thing: books one-year FDs and renews them each year. And each year lately, the renewal rate is a little lower, and he can't figure out why. He hasn't done anything wrong. He's meeting reinvestment-rate risk — the risk that when your investment matures, you can only re-lend the money at whatever rate the cycle offers *then*, which may be lower than before.

Trace it in rupees (illustrative rates around today's levels). Near the 2024 peak Harpreet booked his ₹3,00,000 in a one-year FD at about 7.0%, earning ₹21,000 for the year. It matures now, mid-cycle-easing, and the best comparable one-year renewal is about 6.5%. Renew at 6.5% and the same ₹3,00,000 earns ₹19,500 — ₹1,500 less for the year, on the exact same money, purely because the RBI turned the cycle down between his booking and his renewal.

Nothing here says Harpreet made a mistake or lost money — he earned every rupee his old FD promised. The lesson is only that a chain of short FDs quietly hands your income over to the cycle. If steady income matters to him as retirement nears, mixing in some longer fixed deposits now — while rates, though off their peak, are still reasonable — smooths the ride. Check: reinvestment-rate risk = your renewal rate is set by the cycle, not by you; short deposits feel it most.

Back to Suresh, 55, in Kochi, ~₹1.8cr invested, who found his debt fund had dropped and felt betrayed by the word "safe." Now you can reassure him precisely. A debt fund is just a basket of bonds, and its NAV — its per-unit price — is marked to market every day: it reflects what all those bonds would fetch if sold today. So when rates move, the fund's NAV rides the seesaw exactly like a single bond. A dip after a rate rise isn't the fund "losing" his money; it's the seesaw showing up on his screen.

And in the cycle we're actually in, the story has mostly run the *other* way for him. Rates fell about 125 bps through 2025 — and by the seesaw, falling rates lift existing bond prices, so Suresh's debt-fund NAVs got a quiet mark-to-market tailwind on the way down. That's the pleasant flip side: a rate cut is a mild boost to bonds you already hold. But notice the two words — *mild* and *already*. It's a tailwind, not a windfall, and crucially it is not a signal to trade. The gain came to him for holding; chasing it by buying long bonds *after* a cut, hoping for more, is exactly the market-timing trap this lesson is steering you away from.

The forward risk is the honest counterweight. With inflation nudging up, the next RBI move could eventually be a *hike* — which, by the same seesaw, would ding bond prices, and hit long-duration holdings hardest. That's precisely why the sober advice for a holder like Suresh is keep your duration modest unless you have a specific reason and horizon for going long. The table below pulls all three people together, colour-coding who a cut and a hike each help and hurt:

Read across the rows and the symmetry is the whole lesson: there is no move that is simply "good" or "bad." A cut helps borrowers and lifts existing bond prices while it thins a saver's future income; a hike does the reverse. Your answer to "is this good for me?" depends entirely on which side of the ledger you're standing on — borrower or saver, holder or forced seller, short or long. Check: for Suresh, a bond-fund dip is a paper mark, a cut was a mild tailwind, and neither is a reason to trade; keep duration modest.

It's natural, once the seesaw clicks, to start scheming: *if a cut lifts bonds and helps borrowers, shouldn't I load up on long bonds before the next cut? And doesn't a cut pump up the stock market — should I buy shares when the RBI eases?* Gently: no. Reading the cycle is for understanding your own position, not for timing trades. Two reasons.

• The bond market has already moved. G-sec yields re-price continuously and usually *anticipate* the RBI — by the time a cut is announced on TV, the expected part of it is baked into prices. You are not front-running the RBI; the professional market did that weeks ago. Betting on the obvious move is betting on being faster than people who do this full-time.
• The effect on stocks is real but loose and unreliable. Yes, lower rates can help equities (cheaper borrowing, and bonds become a less attractive alternative). But 'can help' is not 'will rise' — growth, earnings, global flows, and valuations all swamp the rate signal in any given year. Plenty of easing cycles have coincided with flat or falling markets. Treating a rate cut as a buy signal is how confident people lose money.

The rate cycle's effect on your equity SIP is context, not a command. You keep investing through cuts and hikes alike, because you're buying decades of compounding, not this quarter's rate. The only place the cycle should change your behaviour is on the fixed-income side — *matching how long you lock money to when you'll need it* — and even there the moves are slow and small, not clever trades. Check: don't time the cycle; use it to position your safe money, keep your equity plan on autopilot.

One caveat before the fixtures, kept deliberately short. The interest from FDs and most bonds is taxable at your income-tax slab rate — so the headline rate isn't what lands in your pocket. A 6.95% FD is worth noticeably less after tax to Suresh (30% slab) than to someone who pays little or no tax. This is exactly why, when you lock a rate, you should compare *after-tax* yields, not headline ones.

Every genuine fear is a handle a fraudster can grab, and the rate cycle hands them a good one. The pitch arrives by WhatsApp, a slick reel, or a smooth "relationship manager": *"Rates are about to crash — your FD is finished. Move it now into our government-backed bond paying a guaranteed 12%, completely unaffected by RBI cuts."* It weaponises exactly the anxiety this lesson exists to calm. Here's how to see through it in ten seconds.

The killer tell is the one number you've been carrying since the yield section: the risk-free 10-year G-sec is ~6.76%. That is the most anyone can earn lending to the safest borrower in India. A rupee product promising a *guaranteed* 12% "safe" and "unaffected by rates" is claiming to beat the government by more than five percentage points with no risk — which is impossible. The extra return is either fictional (a Ponzi paying old investors with new money) or hiding real risk they're not naming. "Guaranteed" plus "far above the G-sec" is not an opportunity; it's the signature of a fraud.

Check: no legitimate rupee product beats the ~6.76% G-sec by a wide margin risk-free; "guaranteed 12%, unaffected by RBI" is a lie with a number attached. Verify on SEBI Check / RBI Retail Direct; report to SEBI SCORES / 1930.

A good adviser handling the rate cycle for a client does something quiet and unglamorous — and you can do the same thing yourself for free. Here's the move decoded, and the tell that separates a real one from a fee-machine.

The move is a bond ladder: split your safe money across several maturities — some short, some medium, some long — so a chunk matures every year. That way you're never forced to bet everything on where rates go next. When rates are high, you lock a good portion long; you keep duration modest overall so a hike can't hurt you badly; and you simply *do not try to time the cycle.* The DIY substitute is genuinely within reach of any reader here: a handful of FDs and G-secs at staggered maturities (buyable yourself through RBI Retail Direct — Lesson 34), plus a short-duration debt fund for the liquid part. No PMS (a portfolio management service), no fancy product, no fee.

Check: ladder your maturities, lock a portion long when rates are high, keep duration modest, don't time the cycle — and treat any adviser who trades your bonds on every rate move as a cost, not a service.

Maybe you're reading this a step too late, with a specific regret. Two are common, and neither is the catastrophe it feels like. Set the blame down first — the rate cycle fools professionals daily; you were never going to call it perfectly — and then let's look at what's actually true.

"I locked a five-year FD, and then rates went up — I'm stuck below the new rate." You didn't lose anything. Your FD is paying exactly what it promised the day you booked it; you're simply not getting the *extra* that later savers get. That's the flip side of the certainty you bought — and certainty was the point. Let it run to maturity; breaking it to chase the new rate usually costs a penalty that eats the difference. When it matures, you'll renew at whatever the cycle offers then, and the ladder idea will spread that risk next time.

"My bond fund dropped after a rate rise, so I panicked and sold." This is the one worth learning from, because selling is what turns the seesaw's paper dip into a real, permanent loss (a point from Lesson 5 · Risk, Truly Understood). Had you held, the fund's NAV would very likely have recovered as its bonds rolled over into new, higher-yielding ones — a bond fund actually *benefits* over time from higher rates, once the initial dip passes. If you're holding one now and it's down on a rate move, the lesson is the opposite of panic: don't sell a good bond fund into a rate-driven dip. If you already sold, forgive it, and let the seesaw teach the next decision. Check: a locked FD still pays what it promised; a bond-fund dip recovers if held — selling is the only way to make it permanent.

The questions real people ask after an RBI headline, answered in plain terms.

• "The RBI cut rates — is that good or bad for me?" It depends who you are that day. Good for a borrower (cheaper EMIs, soon) and for anyone already holding bonds (their prices tick up). Less good for a saver, whose future FDs and renewals will pay a bit less. There's no single answer — that's the whole point of the cut/hike table above.
• "Why did my bond or debt fund drop when rates rose?" The price–yield seesaw. Rates up → existing bonds are worth less to a new buyer → the fund's mark-to-market NAV dips. If you hold, it's a paper move that recovers as bonds mature and roll into higher-yielding ones. You didn't lose money unless you sell.
• "Is the repo rate the same as my FD or loan rate?" No. The repo (5.25%) is the RBI's rate to banks. Your FD (~6.95%) and your loan (higher) are retail rates derived from it, each with a margin and a lag. They move roughly with the repo, not identically.
• "Should I lock a long FD right now?" If you need steady, certain income and today's fixed rate is acceptable, locking reduces your reinvestment risk — but don't put everything in one maturity. Ladder it. And remember we're late in an easing cycle, so the very best rates have passed; the administered senior schemes (SCSS 8.2%) are the lingering high spot.
• "My home-loan EMI jumped right after a hike — why so fast?" Because most floating retail loans are repo-linked (EBLR) and re-price within a quarter. Loans transmit fast; FDs and savings transmit slowly. It feels unfair, and mechanically it is asymmetric.
• "Should I switch to a floating-rate bond to catch high rates?" Floating-rate bonds (like the RBI FRSB) reset with rates — they help when rates are *rising* and hurt when they're *falling*. To *lock in* a high rate before cuts, you want a fixed instrument, not a floating one. They're opposite tools.
• "Does the rate cycle move the stock market too?" Loosely, and unreliably. Lower rates can support equities, but earnings and global factors usually matter more, and easing cycles have coincided with flat markets before. It's context, never a buy/sell signal — keep your SIP running.
• "Can I predict the next RBI move and profit from it?" Practically, no. The bond market already prices in the expected move before it's announced, and even professionals are regularly wrong on timing. Reading the cycle is for positioning your safe money, not for trading.
• "What rate should I compare everything against?" The risk-free 10-year G-sec, ~6.76% today. Anything riskier should offer more to be worth it; anything 'guaranteed' far above it is a warning sign, not a deal.
• "Rates are falling — should I rush all my cash into long bonds for the price gains?" No. That's timing the cycle, and the market has already moved. Match your bond length to when you need the money and keep your overall duration modest; the seesaw is a reason to be sensible, not a reason to speculate.

Reading about the seesaw is one thing; feeling it move is another. Use the explorer below to build any bond you like — set its coupon, its years to maturity, and a new market rate — and watch its price swing, in the exact direction and rough size the lesson described. It starts pre-filled with Lakshmi's kind of holding: a ₹1,00,000 government bond, 7% coupon, 10 years, with rates nudged up to 8%.

Try three experiments, and let each confirm a section you just read. One: push the market rate *below* the coupon and watch the price rise above ₹1,00,000 — the seesaw's other side (Suresh's tailwind). Two: keep the rate change the same but stretch the years from 2 to 30 and watch the price move balloon — that's duration. Three: read the verdict line each time — it tells you what the move means for a *holder* (a paper mark you ride out) versus a *new buyer* (a better yield) versus a *forced seller* (the only one who takes a real hit). It reproduces the lesson's numbers exactly, and it's illustrative — direction and rough size, not a promise about any specific bond.

A quick refresher of every term this lesson introduced — skim it and if any line feels unfamiliar, jump back to that section.

• Repo rate — the interest rate at which the RBI lends short-term money to banks; the anchor from which FD, loan, and bond rates are priced. Currently 5.25%.
• RBI monetary policy / MPC — the Monetary Policy Committee's use of the repo rate to keep inflation near its 4% target (2–6% band) while supporting growth; it cuts when growth is weak and hikes when inflation runs hot.
• Monetary transmission — how a repo-rate change passes through the banking system into the rates you actually pay and earn; fast for repo-linked loan EMIs, slower and partial for FDs and savings.
• Rate cycle — the multi-year wave of the repo rate: an easing phase (successive cuts) or a tightening phase (successive hikes).
• Yield — what a bond actually earns for someone buying it at today's price (annual return baked into the price), as opposed to the fixed coupon it was issued with.
• Price–yield seesaw — the inverse link between a bond's price and market rates: when rates rise, existing bond prices fall; when rates fall, they rise.
• Duration (intro) — the idea that a longer-dated bond's price swings more for the same rate move; short bonds are steadier, long bonds more rate-sensitive. Full treatment in Lesson 32.
• Reinvestment-rate risk — the risk that when an investment matures you can only re-lend the money at whatever (possibly lower) rate the cycle offers then; felt most by short, frequently-renewed deposits.
• Mark-to-market — valuing a holding at what it would fetch if sold today; a bond or debt fund's daily NAV is marked to market, so it moves with the seesaw even when you haven't sold anything.