minimum lending rate: meaning, definition, pronunciation and examples
C2Formal, Technical
Quick answer
What does “minimum lending rate” mean?
The lowest interest rate at which the central bank of a country lends money to commercial banks.
Audio
Pronunciation
Definition
Meaning and Definition
The lowest interest rate at which the central bank of a country lends money to commercial banks.
A benchmark interest rate, now often replaced by terms like 'base rate' or 'policy rate', historically used as a key monetary policy tool to regulate the economy by controlling the cost of borrowing.
Dialectal Variation
British vs American Usage
Differences
The term 'Minimum Lending Rate' (MLR) was specifically used by the Bank of England. The US equivalent historical/conceptual term is the 'discount rate' (the rate the Federal Reserve charges commercial banks for loans). The modern UK term is 'Bank Rate'; the modern US term is the 'Federal Funds Rate' (target) for interbank lending, with the 'discount rate' being separate.
Connotations
In the UK, it carries a historical, somewhat dated connotation linked to 1970s economic policy. In the US, 'discount rate' is the direct functional equivalent but is a standard, ongoing technical term.
Frequency
Extremely low in current usage. Primarily found in historical economic texts, financial journalism discussing past events, or comparative economic studies. 'Base rate' or 'policy rate' are far more frequent in contemporary UK English.
Grammar
How to Use “minimum lending rate” in a Sentence
The [Central Bank] set/raised/cut the minimum lending rate to [X]%Borrowing was tied to the minimum lending rate plus [Y]%The abolition of the minimum lending rate in 1981...Vocabulary
Collocations
Examples
Examples of “minimum lending rate” in a Sentence
verb
British English
- The Treasury ultimately decided to ***minimum-lend-rate*** the banks at 12%. (Note: This is a forced, non-standard nominalisation for illustration; the term is a fixed noun phrase.)
American English
- The Fed does not ***minimum lending rate*** banks; it sets the discount rate. (See note above.)
adverb
British English
- (No standard adverbial form exists for this noun phrase.)
American English
- (No standard adverbial form exists for this noun phrase.)
adjective
British English
- The ***minimum-lending-rate*** era was characterised by high inflation. (Hyphenated attributive use)
American English
- A ***minimum-lending-rate*** policy is a type of monetary targeting. (Hyphenated attributive use)
Usage
Meaning in Context
Business
Used in historical analysis of company financing costs or in boardroom discussions about past economic climates. 'Our debt in the late 70s was priced at the minimum lending rate plus two percent.'
Academic
Used in economic history, monetary policy studies, and papers on the evolution of central banking tools. 'The transition from the minimum lending rate to a more market-led system marked a significant shift.'
Everyday
Virtually never used. A person might encounter it in a documentary about 1970s Britain or in a historical novel.
Technical
Used precisely in financial journalism referencing past events or in comparative central banking glossaries. 'The Chancellor's decision to suspend the minimum lending rate caused short-term market volatility.'
Watch out
Common Mistakes When Using “minimum lending rate”
- Using it to refer to current central bank rates. Confusing it with the interbank lending rate (e.g., LIBOR, Sonia). Using it as a synonym for any low interest rate offered by a commercial bank.
FAQ
Frequently Asked Questions
No, the Bank of England officially stopped using the Minimum Lending Rate (MLR) in 1981. It was replaced by a more market-oriented system, and the key rate is now called the 'Bank Rate'.
Conceptually, they serve the same purpose as the central bank's key interest rate. Operationally, the MLR was often set administratively, while the modern base rate/Bank Rate is set by a Monetary Policy Committee to influence market rates indirectly.
Not directly. It was the rate for banks borrowing from the Bank of England. However, it heavily influenced all other interest rates in the economy, so mortgages, loans, and savings rates for individuals would move in relation to it.
It is crucial for understanding economic texts, news archives, and historical analyses of the UK economy from the 1970s and early 1980s. It provides context for periods of high inflation and shifting monetary policy.
The lowest interest rate at which the central bank of a country lends money to commercial banks.
Minimum lending rate is usually formal, technical in register.
Minimum lending rate: in British English it is pronounced /ˈmɪn.ɪ.məm ˈlend.ɪŋ ˌreɪt/, and in American English it is pronounced /ˈmɪn.ə.məm ˈlend.ɪŋ ˌreɪt/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “None specifically for this term.”
Learning
Memory Aids
Mnemonic
Think of it as the 'MINIMUM price' (rate) for 'LENDING' money from the ultimate bank (the central bank). MLR = Minimum Lending Rate.
Conceptual Metaphor
THE CENTRAL BANK AS THE SOURCE: The rate is the price of accessing the foundational source of money for the banking system. A LEVER OR DIAL: The rate is a control mechanism adjusted to manage the economy's speed (inflation/growth).
Practice
Quiz
What is the most accurate modern British English equivalent for 'minimum lending rate'?