We have talked about inflation in the last three episodes. We cannot finish talking about inflation without mentioning the role of interest rates. They are joint at the hip. 

We have seen RBI or for that matter most central banks in the world changing interest rates as the inflation level changes. Once these interest rates are changed, interest rates on our home loan or vehicle loan or working capital loan also changes. Why does that happen? What is the mechanism through which a change in interest rate by the RBI, transmits to our home loan or auto loan? We navigate you through this entire process in this episode. 

Sources and Further Information:

RBI's Functions and Working - Monetary Policy and Market Operations

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