What Is The Bank Rate, Repo Rate, Reverse Rate And How Do They Affect The Economy?

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Bank Rate is the discount rate that is known as the rate of interest that is charged by the central bank in order to advance the loans and the advances that are extended to the commercial banks and other similar kind of financial institutions. There are changes made in the bank rate to regulate the supply of money in the market.

Repo rate is the tool of credit management that is used by the Reserve Bank in order to regulate the liquidity of money in South Africa. In this the money is borrowed by the banks from the Reserve Bank. The Reserve Bank only makes a certain amount of money available to the other banks. This is how the repo rate is determined.

The Reverse rate is a kind of arrangement that allows the homeowners to borrow against the equity in their home. He receives monthly tax free payments that are called as the reverse-annuity mortgage.

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