An increase in the Bank Rate generally indicates that the
This questions was previously asked in
UPSC CSP Previous Year Paper (2013)
market rate of interest is likely to fall
Incorrect Answer Central Bank is no longer making loans to commercial banks
Incorrect Answer Central Bank is following an easy money policy
Incorrect Answer Central Bank is following a tight money policy
Correct AnswerExplanation:
Increase in bank rate increases the cost of borrowing by commercial banks which results in the reduction in credit volume to the banks and hence the supply of money declines. Increase in the bank rateis the symbol of tightening of RBI monetary policy.
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By: Abhipedia