Why REPO rate is being hiked to control Inflation ?
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Answer Posted / basavaraj m jadegondar
I don't know that the repo rate is being hiked to "control"
inflation. In US
there are 5 states badly hurt by the bad loans given out by
mortgage
companies, and the people lost or are losing their homes to
repossession
because of the baloon payment required. The homes lost 20%
of their value and
taxes increased on those properties. The gov't is trying to
help helple save
their homes (else where would they go, to tent city?). If
the percent
interest goes up by the Fed Govt then there's a good
possibility we will see
inflation. So govt is trying to keep that interest rate at
zero or low until
the US recovers. That also means a person does not get
interest or gets very
low interest on their savings. Still banks are folding, 100
so far in 2009.
See and take heed from what happens when loans are given to
people who can't
repay, who have no job, who don't have steady income or who
don't have ample
downpayment.
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