Repo rate aka repurchasing rate is the rate at which the RBI lends money to commercial banks for a short period by repurchasing government securities from them.
It is also known as the policy rate.
It is used by the RBI to control inflation i.e when inflation rises, the RBI increases the repo rate so that the credit-creating capacity of banks comes down resulting in less money supply in the economy.
Presently it stands at 6.50%
