New Delhi, Oct. 7 -- The Reserve Bank of India (RBI) on Wednesday hiked the repo rate by 25 basis points to 5.5%, its first hike in nearly four years, joining a host of global central banks building its defences against inflation risks.

The hike will lead to a near-immediate increase in equated monthly instalments or EMIs for retail borrowers whose loans are linked to the repo rate. Repo rate is the interest rate at which commercial banks borrow from the RBI. Mint takes a look at what this means for borrowers and savers.

For retail borrowers whose floating-rate loans are linked to the repo rate, either monthly payouts will rise, or the tenure of their repayments will increase. Lenders will soon start passing on the revised interest rate...