bank rate
C2Formal, Technical, Financial
Definition
Meaning
The official interest rate set by a central bank.
The rate at which the central bank lends money to domestic commercial banks. It influences other interest rates in the economy and is a key monetary policy tool.
Linguistics
Semantic Notes
A compound noun referring to a specific, institutional rate. Often used interchangeably with terms like 'base rate' or 'policy rate', though subtle institutional differences may exist.
Dialectal Variation
British vs American Usage
Differences
In the UK, 'Bank Rate' (often capitalised) historically refers specifically to the rate set by the Bank of England. In the US, the equivalent is more commonly the 'Federal Funds Rate' or 'discount rate', though 'bank rate' is understood.
Connotations
Both have formal, official connotations. The UK usage has a specific historical and institutional weight.
Frequency
Higher frequency in UK financial news. In US contexts, more specific terms like 'Fed rate' are more common.
Vocabulary
Collocations
Grammar
Valency Patterns
The [central bank] [verb: set/raised/cut] the bank rate.The bank rate [verb: rose/fell/remained] at X%.Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “None directly associated. Related: 'the cost of money'.”
Usage
Context Usage
Business
Used in financial reports and economic analysis: 'The rise in the bank rate will increase our borrowing costs.'
Academic
Used in economics papers on monetary policy transmission mechanisms.
Everyday
Rare in casual conversation. May appear in news headlines: 'Bank rate hits 15-year high.'
Technical
Precise term in central banking, with defined operational frameworks.
Examples
By Part of Speech
verb
British English
- The Monetary Policy Committee will bank-rate the economy tomorrow.
- They are considering bank-rating the cost of borrowing.
American English
- The Fed is unlikely to bank-rate aggressively this quarter.
adjective
British English
- The bank-rate decision is due at noon.
- We're analysing bank-rate expectations.
American English
- The bank-rate announcement caused market volatility.
Examples
By CEFR Level
- The bank rate affects loans and mortgages.
- The news said the bank rate went up.
- The central bank raised the bank rate to combat rising inflation, which will make mortgages more expensive.
- A lower bank rate is typically used to stimulate economic growth during a recession.
- The Monetary Policy Committee's decision to hold the bank rate at 5.25% was seen as a dovish pause amid persistent core inflation metrics.
- Analysts are debating whether the current bank rate tightening cycle has sufficiently cooled the labour market to bring CPI back to target.
Learning
Memory Aids
Mnemonic
Think of the BANK as the main bank (central bank), and its RATE is the price it charges other banks for money. It's the 'boss' interest rate.
Conceptual Metaphor
A LEVER or CONTROL KNOB for the economy; a THERMOSTAT regulating the economy's temperature.
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Do not confuse with "bankovskaia stavka" (any bank's rate) or "protsentnaia stavka". It specifically refers to the rate of the central bank (kliuchevaia stavka Tsentral'nogo banka).
- Not a general term for interest rate ('protsent').
Common Mistakes
- Using 'bank rate' to refer to the interest a commercial bank gives on savings accounts (that's a 'savings rate').
- Omitting 'the' (incorrect: 'Bank rate was raised.' correct: 'The bank rate was raised.').
Practice
Quiz
What is the primary purpose of a central bank changing the bank rate?
FAQ
Frequently Asked Questions
No. The bank rate is set by the central bank for commercial banks. Your loan's interest rate is set by your bank and is influenced by, but is higher than, the bank rate.
The Bank of England's Monetary Policy Committee (MPC) sets the UK Bank Rate, usually in scheduled meetings.
It can change at the central bank's scheduled policy meetings, which are typically monthly or quarterly, but it can remain unchanged for long periods.
Borrowing becomes more expensive for commercial banks, which usually pass on this cost, leading to higher interest rates for businesses and consumers. This tends to slow down spending and inflation.
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