What are different rates in bank like Repo rate, reverse Repo, CRR

Question

Accepted Answer

Repo rate, reverse repo rate, and CRR are different rates used by banks to manage liquidity and control inflation.

Repo rate is the rate at which the central bank lends money to commercial banks, and is used to control inflation by increasing or decreasing the cost of borrowing.
Reverse repo rate is the rate at which the central bank borrows money from commercial banks, and is used to manage liquidity in the banking system.
CRR (Cash Reserve Ratio) is the percentage of deposits that banks are required to keep with the central bank, and is used to control the amount of money in circulation.
For example, if the central bank wants to increase liquidity in the banking system, it may decrease the repo rate and increase the reverse repo rate, making it cheaper for banks to borrow money and more profitable for them to lend.
On the other hand, if the central bank wants to control inflation, it may increase the repo rate and decrease the reverse repo rate, making it more expensive for banks to borrow money and less profitable for them to lend.
Similarly, if the central bank wants to reduce the amount of money in circulation, it may increase the CRR, forcing banks to keep more money with the central bank and reducing the amount of money they have available to lend.

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