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what is Reverse Repo Rate?
Reverse Repo Rate is defined as the rate at which the Reserve Bank of India (RBI) borrows money from banks for the short term. It is an important monetary policy tool employed by the RBI to maintain liquidity and check inflation in the economy. The Reverse Repo Rate helps the RBI get money from the banks when it needs. In return, the RBI offers attractive interest rates to them. The banks also voluntarily park excess funds with the central bank as it provides them with an opportunity to earn higher interest on surplus money. The Reverse Repo Rate is decided by the Monetary Policy Committee (MPC), headed by the RBI Governor. The decision is taken in the bi-monthly meeting of the Committee.
Difference between repo rate and reverse repo rate?
Impact of Reserve Repo rate hike and cut:
Latest Updates on Reverse Repo Rate
At its current level, the repo rate is at its highest since August 2019
The conduct of monetary policy is not based on simplistic binaries, particularly during times of extraordinary uncertainty
The repo rate before the pandemic came was 5.15%
FY23 inflation projection may go above 6%; liquidity steps anticipated
A section of the market sees further liquidity tightening measures from the RBI in the June review of the monetary policy
The 10-year government bond shot up 26 bps, with the street expecting another rate hike in the June policy
Sets stage for rate hikes after June policy amid high oil prices, yields
RBI Monetary policy updates: As expected by market participants, RBI retained status quo on key interest rates. Governor Shaktikanta Das said. "Approach needs to cautious, but proactive". Stay tu
The comfort provided by the expected improvement in inflation was the anchor for the super-dovish February policy
Bond yields have shed seven basis points to 6.73 per cent on Thursday after touching 6.88 per cent on the Budget day
The rates represent a particular stance with regard to the monetary policy and the committee decided to continue with the accommodative stance, said RBI Governor Shaktikanta Das
RBI monetary policy 2022: 'India is charting a different course of recovery than the rest of the world, to be the fastest-growing economy,' says RBI governor
Rampant corruption, double digit inflation, policy paralysis were part of the dark age under Congress rule, says Sitharaman
The gap, which is 25 basis points (bps) during normal times, has widened to 65 bps since the onset of the Covid-19 pandemic
RBI watchers call for a CRR hike to support OMOs
During H1, banks were investing in G-secs and are not under stress due to rising yield
MPC's stance should remain accommodative till growth is secured, and future actions should be data-driven. But for now, reverse repo rate should be hiked by at least 20 bps
Inflation may not be as transitory as has been estimated since rising demand will add to the supply bottlenecks
15-40 bps raise likely in MPC meeting next week, say market participants
The central bank offered Rs 75,000 crore of liquidity to the banking system against which banks bid for up to Rs 1.38 trillion