Repo Rate Meaning Examples In Sentence Synonyms & Antonyms

Repo rate Meaning

Repo rate is the kind of monetary policy tool used by central bank to control flow of money in the economy. It means the speed at which the commercial banks can access funds from the central bank of any country, through putting up government securities as surety.

If for instance the Federal Reserve or the Reserve Bank of India feels that there is a need to increase the amount of money flowing in the economy then the repo rate can be lowered. That means banks can borrow money at a cheaper price from the central bank, thus helping them lend money to customers at cheaper price. This encourages lending, investment within an economy and therefore increases the economic activity.

Repo rate Parts of Speech (With Examples)

Nouns: repo rate, repurchase rate, monetary policy tool, central banks, supply, money, economy, commercial banks, securities, agreement, date.
Verbs: is, used, control, borrow, selling, buy.
Adjectives: simple, later.
Adverbs: also, at which, back, later.
Prepositions: by, with, at, in.
Pronouns: it, them.
Conjunctions: and.
Example: The central bank sets the repo rate, which is the rate at which commercial banks can borrow money by selling securities with an agreement to buy them back later.

Repo rate Examples in Sentences (Various Examples in Sentences)

The central bank raised the repo rate to curb inflation.
Commercial banks can borrow funds from the central bank at the repo rate by selling their government securities.
The repo rate cut by the central bank helped stimulate economic growth.
The market reacted positively to the news of a repo rate reduction.
Investors watch for changes in the repo rate as it can signal the central bank's stance on monetary policy.
The central bank uses the repo rate as a tool to manage the liquidity in the financial system.
The repo rate is closely watched by economists and financial analysts for its impact on the economy.
The increase in the repo rate made borrowing more expensive for banks, which in turn affected lending rates for consumers.
The central bank kept the repo rate unchanged in its latest monetary policy meeting.
A change in the repo rate can influence the exchange rate of a currency, making it more or less attractive to foreign investors.
The central bank announced a reduction in the repo rate by 25 basis points, to stimulate economic growth.

Repo rate Antonyms (With Meaning)

Discount rate: It is the rate of interest charged by a country’s central bank for a very short term facility.
Federal funds rate – the interest rate used by banks to borrow funds from one another for just one night.
Banking accommodation – the interest which the central bank charges on lent money to the commercial banks.
Prime rate: The interest rate that commercial banks charge to their strongest borrowers.
Policy rate – the rate of interest that a central bank uses to facilitate to its monetary policy.
Lending rate is the interest rate at which the existing credit institutions price credit risks to borrowers.
Floor rate refers to the basic interest rate used by banks when setting up finally interest rates for customers
Overnight rate – an overnight cost of funds at which banks borrow money to meet their reserve needs.
Open market operations rate –The rate at which the foreign exchange central bank uses treasury bills to affect the money market.
Target rate meaning the interest rate that is set by the central bank as its desired interest rate for the short term interest rate in the economy.

Repo rate Synonyms (With Meaning)

Easy money policy – monetary policy that involves low interest rates and quick and easy access to credit, and stands in contrast to a tight monetary policy in which the repo rate is high.
Tight money policy- is a monetary policy which is restrictive, highly involving interest rates and limited credit accessibility, the reverse of an easy money policy.
Interest rate cut is the opposite of an interest rate hike and refers to a lowering of the interest rates with which loans are charged.
An interest rate cap refers to a legal ceiling on the interest rate that can be charged on a loan, the point being that it is actually the opposite of an interest rate floor.
Low reserve ratio – a monetary policy whereby a lower percentage of deposit is retained by a bank as reserves, this is the opposite of high reserve ratio.
High inflation – a situation where the price of goods and services increases over a long period which the central bank seeks to contain by adjusting the repo rate.
Stagflation - a monetary scenario that is characterized by a slow and continual decline in the overall price of products and services, which is the exact opposite of inflation.
This is the exact opposite of a shortage of money and it will be discussed in detail below in connection with the loanable funds theory of interest rate determination.
Low interest rates – an economic situation in which the cost of borrowed funds, often a contradiction of high interest rates, is low.
Negative interest rates-a monetary policy in which a central bank charges commercial banks for holding excess reserves, the alternative to positive interest rates.

Video Tutorial For Repo rate (With Meaning, Origin, Examples)

FAQs Related With Repo rate (Grammar)

What is the repo rate?

The repo rate is the rate applied by the central bank on loans extended to the lending banks where goods are sold with a reciprocal understanding of their resale sometime in the future.

What role does repo rate play?

Over the years, the repo rate has emerged as one of the key measures applied by most central banks to regulate monetary flow. Fluctuations in the repo rates tend to impact other interest rates on loans and other financial products, which; in turn, impacts consumer and business expenditure.

What is its impact on the economy?

As for the central bank increases the repo rate, he or she increases the cost of borrowing for the commercial banks, and therefore increases the cost of the loan and other financial instruments. This they can reduce economic growth rate or even prevent inflation. On the other hand, a decrease in the repo rate can contribute to economic growth, since borrowing becomes cheaper.

Who sets the repo rate?

Repo rate is fixed by the central monetary authority of the country prevailing at that time. For instance, in the United States, the target rate is the federal funds rate which is similar to the bank rate used by the FED to regulate money stock.

These changes have usually been done periodically within ever decreasing frequencies but the nature of how often the repo rate is being adjusted varies with the monetary policies of individual central banks.
The repo rate can be changed quite frequently depending on the number of times the monetary policy is adjusted in the respective countries. While some central banks may adjust the repo rate with great regularity as a result of shifting in economic conditions other may make more adjustments over longer intervals.

How does the repo rate that has been set affect inflation?

Inflation is used to mean the general trend of prices with respect to time in an economy. Central banks can use the repo rate to manage inflation because when the rate is increased, growth is slowed down to match the overall demand of goods and services within the economy. On the other hand a lower repo rate can boost economic growth and facilitate inflation.

How does the changing in Repo rate affect the lending rates?

Repo rate on cash can also have an impact on the interest rates of funds charged by the commercial banks. Normally when the repo rate is hiked the borrowing cost for the banking sector goes up and in turn the lending rate to the end users. On the other hand, a lower repo rate implies cheaper borrowings and thus cheaper lending rates.

Will alteration in the repo rates have any impacts on the stock trading in the market?

Yea, fluctuations in the repo rate can affect the overall performance of the stock market. In turn, the rise of repo rate can lead to lower expenditure by the consumers as well as businesses and therefore low earnings are achieved by these companies and low stock prices of shareholder’s stocks. On the other hand, a lower repo rate can cause increased business activities and as a result, cause higher prices for share stocks.

That being the case, how exactly does this repo rate impact the exchange rate?

It also has certain influence over the exchange rate of the currency of a certain country in relation to other currencies. When a central bank increases the repo rate it tends to make the currency more appealing to the foreign investors in turn demand for the currency would go up hence the exchange rate would go up. On the other hand, when the repo rate is set at a lower level this may deter investors with the tendency of having a low exchange rate.

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