Base Rate
Base rate is the minimum interest rate that a financial institution charges its customers for borrowing money. It is also known as the benchmark rate, the base lending rate, or the prime rate. The base rate is used to determine the interest rate for a variety of financial products, such as mortgages, credit cards, and personal loans. It is also used to calculate the interest rate for savings accounts and other investments.
History of the Term
The concept of a base rate has been around since the early 20th century. In the United States, the Federal Reserve sets the base rate, which is used by banks to determine the interest rate they charge customers. In the United Kingdom, the Bank of England sets the base rate, which is used by banks to determine the interest rate they charge customers. In other countries, the central bank sets the base rate.
The base rate is an important tool for central banks to control the money supply and the economy. By setting the base rate, central banks can influence the amount of money that banks are willing to lend and the interest rates they charge. This, in turn, affects the amount of money available in the economy and the cost of borrowing.
Table of Comparisons
Country | Base Rate |
---|---|
United States | 0.25% |
United Kingdom | 0.75% |
Japan | -0.1% |
Germany | -0.5% |
Summary
Base rate is the minimum interest rate that a financial institution charges its customers for borrowing money. It is used to determine the interest rate for a variety of financial products, such as mortgages, credit cards, and personal loans. The base rate is an important tool for central banks to control the money supply and the economy. For more information about base rate, you can visit the websites of the Federal Reserve, the Bank of England, and other central banks.
See Also
- Interest Rate
- Prime Rate
- Discount Rate
- Federal Funds Rate
- Repo Rate
- Reverse Repo Rate
- Marginal Lending Rate
- Deposit Rate
- Loan Rate
- Base Lending Rate