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Why would the central bank decrease repo rates and when is this usually done?

Asked by: 420 days ago - 1 Answers - 626 views

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    By decreasing the repo rates, the central bank is attempting to encourage cash flow in the economy. Banks will exchange their government securities for cash, which in theory, will be spent.

    This is also applicable for end consumers, as well. Interest rates are kept low in hopes the benefit of saving cash will be low, too, so consumers will invest/spend it elsewhere, in theory.

    Answer by Rick 404 days ago


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