A nation’s Central Bank establishes the economic framework. The rules and guidelines established by the central bank are followed by all lenders and financial institutions.
The economy is looked at by the central bank every couple of years to see if their goals are being met. The majority of these objectives have to do with controlling inflation. They plan and make amends to achieve their goal if the plan is off course.
The Reserve Bank of India (RBI) is the other name for the central bank in India. Bank policies are planned and predicted by the RBI.
When they raised the repo rate by 25 basis points, they became known. The repo rate has been raised by the RBI twice in the past four years. The rate is now 6.50%, 50 basis points higher than it was four years ago, when it was 6.00%.
What is the Repo Rate?
The rate at which the central bank lends money to commercial banks when they fail to maintain a suitable balance is known as a repo rate. The central bank (RBI) decides this balance. If a commercial bank is unable to keep such a balance, they can borrow the money at interest from the RBI.
