Question

Which one of the following is considered as the 'Policy Rate' in the monitory policy statement of India?

• A. 180 days Government Bond Rate
• B. 92 days Treasury Bill Rate
• C. LIBOR Rate
• D. Repo Rate

Answer 1

Answer:

D. Repo Rate

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.