Repo Rate- The rate at which RBI(The Central Bank of a country) lends money to banks is called repo rate in India.
Reverse Repo Rate- The rate at which borrows money from banks is called reverse repo rate.
The central bank makes changes in repo or reverse repo rates whenever it is required. By doing this the central bank maintains the cash flow in the economy.
Change in the repo rate:
I. To control the inflation rate: To control the inflation rate is one of the main objective of any government. If the inflation rate is very high, the purchasing power of people decreases. Sometimes it become