Nov 17, 2018

What is Repo Rate- Repo Rate Meaning

(RR) Repo Rate Meaning

What is Repo Rate?

Repo rate is the rate at which the central bank of a country here Reserve Bank of India (or your country Central bank) lends money to commercial banks in the case of any shortfall of funds. Repo rate is used to control inflation.

Who make Changes in Repo Rate

The Reserve Bank of India (RBI)  controls the inflation by using Repo rate.

RBI makes changes in Repo Rate if RBI reduces the Repo rate means there is a shortage of currency in the market.

if the Repo rate is low means banks can give loan at the lower interest rate to their customer.
example Home loan, Car loan etc.

or if RBI increases Repo rate means there is enough currency liquidity in the market.

or if Repo rate is high means commercial banks also increase their interest rate.

in this way, the Reserve Bank of India controls Inflation in Indian Economy.
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