what is inflation, repo rate and reverse rate?

Definition of 'Inflation'

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. 

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

 

Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. Banks are always happy to lend money to the RBI since their money are in safe hands with a good interest.

An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money out of the banking system. 

  • 9
how can a central bank use repo rate and reverse repo rate  to influence credit creations by commercial banks
 
  • 2
Repo rate - The rate at which cental bank lend short term credit to commercial banks .
  • 1
Inflation refers to the steep increase of the price of goods and services in the market, which reduces the purchasing power of the currency.

Repo rate is the rate of interest at which central bank lends sums of money to commercial banks.

Reverse repo rate is the the rate of interest the central banks pay on surplus funds parked as deposits by commercial banks.
  • 0
Inflation means whe there is continues increase in prices of product. It leads to inflationary spiral. It means wages catch prices and prices catch wages repo rate is the rate at which central bank lend loans to the commercial bank. With the increase in repo rate, inflation is controlled and with decrease in repo rate, deflation is controlled reverse repo rate is the rate at which commercial bank deposits it surplus fund with the central bank. It is increased when there? is inflation and decrease when there is deflation
  • 0
Inflation is the situation when AD is more than AS
Repo rate is the rate at which commercial bank borrows loan from R.B.I and reverse repo rate is the rate at which central bank take loans from commercial banks
  • 0
Inflation means increase in the prices of the currency or a commodity in the market is called inflation.
Repo rate refers to the rate at which government purchase and sales the security at a given price and At a given point of time.
Reverse repo rate refers to the rate at which all these government securities are repurchased by the government at a given point of time and a predetermined price. It helps the commercial banks to park their surplus fund with the centeral banks
  • 0
Inflation: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.


Repo Rate: The term ?Repo? stands for ?Repurchase agreement?. Repo is a form of short-term, collateral-backed borrowing instrument and the interest rate charged for such borrowings is termed as repo rate.


Reverse Repo Rate: Reverse repo as the name suggests is an opposite contract to the Repo Rate. Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country.
  • 0
Inflation means rise in the prices of the goods /products
  • 0
Inflation means stable increase in price of the goods
  • 0
Please find this answer

  • 0
Where

  • 0
Please find this answer

  • 0
Answers

  • 0
Hello
  • 0
Please find this answer

  • 0
Reverse Repo Rate?is when the RBI borrows money from banks when there is excess liquidity in the market. ... During high levels of?inflation?in the economy, the RBI increases the?reverse repo. It encourages the banks to park more funds with the RBI to earn higher returns on excess funds.

Hope u got correct answer...xd
  • 0
How can we devalue gold
  • 0
Closed economy
  • 0
What are you looking for?