Reverse Repo Rate Meaning Examples In Sentence Synonyms & Antonyms

Reverse Repo Rate Meaning

Reverse repo rate is one of the many Policy rates that are used by Central banks to regulate the money stock in an economy. It is the rate at which central banks provides an overdraft to the commercial banks against government securities with a view to repurchase it at the future date.

When the reverse repo rate is raised, it encourages banks to borrow more money back from the central bank that in turn limits free money available to lend in an economy. This checks inflation whereby price levels are kept stable hence enhancing price stability. On the other hand, they decrease the reverse repo rate so that banks borrow more money to pump into the economy hence increasing circulation to foster growth.

Reverse Repo Rate Parts of Speech (With Examples)

Reverse: Adjective
Example: The reverse gear in a car allows you to move backwards.

Repo: Noun
Example: The repo market is an important part of the financial system.

Rate: Noun
Example: The interest rate on my savings account is very low.

Therefore, "Reverse Repo Rate" is a noun phrase comprised of an adjective (reverse), a noun (repo), and another noun (rate).

Examples of Reverse Repo Rate in Sentences (Example of Reverse Repo Rate in Different Sentences)

The reverse repo rate was adjusted upward by the central bank in order to reduce the immediacy of excess funds by commercial banks with it.
This can also be explained by the fact that an increase in reverse repo rate makes the rate of return for consuming money from customers higher for the banks.
Most of the liquidity is deposited with the C/B due to low interest rate regime but the recent hike in reverse repo rate may otherwise motivate the commercial banks to invest the cash elsewhere.
The reverse repo rate is one of the instruments of monetary policy, which the central bank employs to adjust money availability in the economy and curb inflation.
This is because increasing the reverse repo rate discourages the commercial banks from lending money as they prefer to deposit it with the central bank.
In the same way, some investors take the reverse repo market as a source where they invest their excess cash in the central bank, and earn a return through the reverse repo rate.
The reverse repo rate can be changed when the central bank deems that changes to inflation or to the money supply are warranted.
The cutting of the reverse repo rate influences movements of the interest rates charged on loans and other financial products available in the market since it affects supply of money in the economy.
This rate is usually adjusted lower during time of financial stress such as a financial crisis to ensure that the central bank floods the financial markets so as to spur borrowing.

Reverse Repo Rate Synonyms (With Meaning)

Deposit rate: the interest rate paid on deposits made by banks with the central bank.
Discount rate: the rate at which the central bank lends money to commercial banks.
Policy rate: the interest rate set by the central bank to influence economic activity.
Refinancing rate: the rate at which the central bank refinances loans made by commercial banks.
Short-term interest rate: the interest rate charged on short-term loans.
Base rate: the rate at which the central bank lends money to commercial banks.
Bank rate: the interest rate at which the central bank lends money to commercial banks for longer-term periods.
Call rate: the interest rate charged on overnight loans between banks.
Interbank rate: the interest rate charged on loans made between banks.
Federal funds rate: the rate at which banks lend funds to each other overnight in the United States.

Reverse Repo Rate Antonyms (With Meaning)

The antonyms of “reverse repo rate” would be words or name of places that is contrary to relative rate. Here are some antonyms of "reverse repo rate":
Repo rate – Repo rate is the aforementioned rate that charges interest for the money that the central bank lends to the commercial bank, while the reverse repo rate is the interest paid for lending money to the central bank. As a result, repo rate can go a long way in being identified as the reverse of reverse repo rate.
Expansive monetary policy-Monetary policy can be defined as the accepted rules and policy of the Central Bank concerning the control of the amount of monetary supply and interest rate in relation to economic growth. Similarly, 141 reverse repo rate is applied to withdraw monetary circulation and raise the interest rates. Thus, while expansionary monetary policy is the action taken in the market to promote economic expansion, reverse repo rate is its opposite.

Reduced short term bond yields: Reduced short term bond yields indicate that the monetary policy is slack because it provides incentives for borrowing and spending. Reverse repo rate on the other hand is used to reduce interest rates and ease monetary policy. Hence, reverse repo rate can be seen an antonym to low interest rates.
Inflationary pressures - Inflationary pressures refer to factors which lead to a faster inflation rate of an economy. Repo rate is used for the operation of controlling inflation and to ease out inflationary measures. Hence, inflationary pressures can be regard as an opposite of the reverse repo rate.
High liquidity is a term used to define the status of cash or easily realizable assets available in an economy. Reverse repo rate is applied where the central bank aims to contract monetary circulation and, as a result, cheapens the rates for bank loans. Therefore, high liquidity is an opposite of reverse repo rate.

Video Tutorial For Reverse Repo Rate (With Meaning, Origin, Examples)

What do they mean by venture capital funding?

Answer: The reverse repo rate is the interest which the central bank will pay to the commercial banks for buying government securities.

Why do we need the reverse repo rate?

Answer: Another is the reverse repo rate is used to balance the money supply in the economy and fight inflation.

What then is the difference between the reverse repo rate and the repo rate?

Answer: While the reverse repo rate is the amount that the central bank charges from the commercial banks for accepting to borrow from it, the repo rate is the amount that the commercial banks pay the central bank for borrowing from it.

What is the role of reverse repo rate in monetary policy for the central bank?

Answer: The reverse repo rate is another money supply and inflation controlling monetary policy tool of the central bank.

What is the relationship between the economy and the reverse repo rate?

Answer: This mechanise depends on the level of the reverse repo rate through changes to credit availability, interest rates and inflation.

That is, who can get enlist in the reverse repo market?

Answer: Reverse repos can necessarily involve commercial banks and financial institutions.

What are the risks and shocks associated with the reverse repo market?

Answer: The threats of the reverse repo market include interest rate threats, credit threats, and liquidity threats.

How does the central bank come with that rate of reverse repo rate?

Answer: This means that the reverse repo rate is set by the central bank depending on the internal economic factors including inflation rate, the growth of the economy and the monetary policy target.

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