Question

what are the effects of changes in bank rate?

Answer 1

Changes in the bank rate also affect the stock markets which generally react positively to reduction in the bank rate. Stock markets rise up in the anticipation or in the event of bank ratedecrease while they are bearish on bank rate increase, generally. RBI uses bank rate to balance economic growth and inflation.

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Answer 2

higher wage growth is obtained and hence more profit also stock market rises if bank rate increases it balances economic growth and inflation rate.

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