Why REPO rate is being hiked to control Inflation ?
- 4 Answers
- 16050 Views
- GMR, I also Faced
- E-Mail Answers
Answer Posted / aditya ratnam , nmims mumbai
Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.
Hence, When the repo rate is hiked, the bank gets loan at a higher interest rate from RBI, and henceforth Banks give loan to retail customer/ corporate customer at a more higher rate, so demand for the loan from the customers of bank decreases decreases and there is less money in the market.
Since, the liquidity of the marked is sucked by increasing Repo Rate, public can't afford to pay more for any particular commodity, and hence the inflation of the economy gets controlled.
| Is This Answer Correct ? | 48 Yes | 1 No |
Post New Answer View All Answers
Do you acquire any knowledge on Computers? Elaborate it.
What are the leadership qualities you have?
What is Company Limitted by Shares?
What are your strengths and weaknesses? How will you overcome your weakness?
Define Preference Shares?
What is MFN? What is Gold Standard?
Where is the market (for bonds/equities/FX) going?
How do you handle criticisms?
I want the sample question paper of po exam of sbi?
Tell us about your qualification and subjects you studied?
Whom do you admire the most and why?
What idea do you have about the Banking Industry?
At present who is the prime minister of India?
HI CAN ANY ONE HELP ME OUT IN (FICC INTERVIEW QUESTION) FOR COGNIZANT HYDERABAD.
What motivates you to do your best while working?
