2020
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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200 bps
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300 bps
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Detailed explanation-1: -The LTRO is a framework that allows the central bank to lend money to banks for one to three years at the current repo rate in exchange for collateralized government assets with a similar or longer term.
Detailed explanation-2: -Analysts expect the central bank to raise the rate to 6.50 per cent by February 2023 and then hold this rate throughout the rest of 2023. If the retail inflation cools down, the RBI is likely to pause the rate increases in 2023. Rate hikes since May 2022.
Detailed explanation-3: -The one-day loan is at Overnight Repo while more than that is a Term Repo. Term Repo is also called Variable Rate Term Repo. RBI normally announces auction for Term Repo as it can be for 7, 14, or 28 days. When inflation is higher than RBI’s standards, it increases the rate to check it.
Detailed explanation-4: -Accordingly, the MPC decided to increase the policy repo rate by 25 basis points to 6.50 per cent.