Base Rate
a.k.a. Bank Rate, Policy rate
The main interest rate a central bank sets, which ripples out to every loan and savings rate in the economy.
In plain English
The main interest rate a central bank sets, which ripples out to every loan and savings rate in the economy.
The base rate is the anchor rate a central bank controls. In the UK it is literally called Bank Rate; elsewhere it may be the policy rate, cash rate or federal funds rate.
When it rises, borrowing gets dearer, saving pays more, and the currency often gains appeal to foreign money hunting yield. When it falls, the opposite. That is why currency traders hang on every rate decision.
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