š” Reverse Repo Rate š”
ā¢ The rate at which a country's central bank borrows money from its own domestic commercial banks is known as the Reverse Repo Rate
ā¢ It is a tool for the central bank to manage a country's money supply
ā¢ Assuming all other factors remain constant, the money supply decreases when the reverse repo rate increases and vice versa
ā¢ Commercial banks will be more enticed to deposit their funds with the central bank if the Reverse Repo rate rises, lowering the amount of money on the market