Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. It is policy rate for India and monetary policy committee decides the repo rate
Implications of rising repo rates:
- Higher repo rate leads to higher interest rates and eventually it will make loans costlier.
- In case of higher repo rate , corporate borrowing will become costlier so it can reduce the cash and credit flow.
- Higher repo rates will lead to increase in the value of Indian assets, which in turn will attract for capital inflow.
- There will be fall in exports and increase in imports.
- It will reduce the inflation because of decrease in demand.
Repo rates is policy rate in India and it is the anchor policy rate. Monetary policy committee headed by RBI governor target inflation under the range of 4+/-2. Hence it is an important tool for country like India.
BPCS Notes brings Prelims and Mains programs for BPCS Prelims and BPCS Mains Exam preparation. Various Programs initiated by BPCS Notes are as follows:-
- BPCS 2022 Mains Tests and Notes Program
- BPCS Prelims Exam 2022 - Test Series and Notes Program
- BPCS Prelims and Mains 2022 Tests Series and Notes Program
- BPCS Detailed Complete Prelims Notes