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RBI CREDIT POLICY - 2. page

What is Repo Rate? How does change in Repo Rate affect economy growth?

What is Repo Rate?

repo rate

Repo rate (also known as Repurchase rate) is the rate at which the Central Bank of the country (in India, RBI is the central bank) lends shot-term money to the banks against their securities. In other words, we can say that the Repo rate is a rate at which banks borrow money from RBI for short periods up to 7 or 14 days. In India, the Repo rate is a similar instrument of monetary policy to inject liquidity in banking system as the discount rate in the United State.

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What is Deflation, Stagflation, Hyperinflation & Headline Inflation?

What is Deflation, Stagflation, Hyperinflation & Headline Inflation?

What is Deflation?

deflation

Deflation is also known as the opposite of inflation, which refers to a condition “where there is a general decline in the prices of goods and services over a time period which results in the hike of currency purchasing power.” Usually, it is observed that the deflation occurs when the general price level declines due to lower inflation rate (i.e. below 0% or less also called negative inflation rate). During deflation, we buy more goods and services with the same amount as we were buying earlier. Deflation generally occurs due to either reduction in the supply of money or credits or due to direct contractions in spending. These spending may be in the form of a reduction in government spending, personal spending or investment spending. Continue reading