Business Studies, asked by Alecia6512, 1 year ago

Does lowering of bank rate affects liquidity in market

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Answered by ashish17817

0

Liquidity Effect. When the Fed pursues a tight monetary policy, it takes money out of the system by selling Treasury securities and raising the reserve requirement at banks. This raises interest rates because the demand for credit is so high that lenders price their loans higher to take advantage of the demand.

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