Bank Rates
Posted on October 11, 2009
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Bank rate is the interest rate at which the Central Bank of any country lends to the various banks operating in the country. This rate under goes periodical change based on various factors. The foremost factor that contributes for the revision is inflation.
If the inflation is on the higher side the Central Bank normally hikes the rate to curtail money supply and brings down the inflationary pressure. At the same-time, the growth of the nation is also taken into account as the higher rate of interest deters industrial and business houses to go in for bank credit. This ultimately affects the growth and culminates in lesser GDP level.
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