Repo Rate is fixed by the Central Bank, whereas, Reverse Repo Rate is fixed by the Commercial Banks

Question

676 viewsDecember 24, 2023Money and Banking True or False

0

Anurag Pathak28.64K December 24, 2023 0 Comments

True or False with Reasons:

Repo Rate is fixed by the Central Bank, whereas, Reverse Repo Rate is fixed by the Commercial Banks.

score 0 · Answer 1 · 2023-12-24T15:41:05+00:00

False,

Both repo rate and reverse repo rate are fixed by the Central Bank.

Explanation:-

Repo Rate and Reverse Repo Rate are the two tools of monetary policy.

It is the policy adopted by the Central Bank of an economy in the direction of credit control or money supply.

As RBI has the sole monopoly in currency issues, it can control credit and supply of money.

For this, RBI makes use of the following instruments of Monetary Policy.