Question

At the time of inflation, RBI ---- repo rate.

• A. decreases
• B. increases
• C. keeps steady
• D. abolishes

Answer 1

Answer:

B. increases

Repo Rate:

• It is a short-term interest rate which RBI charges on commercial banks on loans given by RBI
• Repo rate is also known as Repurchase Agreement or Repurchasing Option.
• At the time of inflation, RBI increases repo rate.
• At the time of deflation, RBI reduces repo rate.