What is Repo-Rate

Definition of 'Repo Rate'
Repo rate is the rate at which the central bank of a
country (RBI in case of India) lends money to
commercial banks in the event of any shortfall of
funds.
Definition: Repo rate is the rate at which the central
bank of a country (Reserve Bank of India in case of
India) lends money to commercial banks in the event
of any shortfall of funds. Repo rate is used by
monetary authorities to control inflation.
Description: In the event of inflation, central banks
increase repo rate as this acts as a disincentive for
banks to borrow from the central bank. This ultimately
reduces the money supply in the economy and thus
helps in arresting inflation.
The central bank takes the contrary position in the
event of a fall in inflationary pressures. Repo and
reverse repo rates form a part of the liquidity
adjustment facility.