This means that when Bank Rate comes close to 0%, how far banks pass it on to lower saving and borrowing rates reduces. But they can’t pay less than 0% on savings or people might not deposit any money with them. To cover their costs, banks need to pay less on saving than they make on lending. Interest rates can change for other reasons and may not change by the same amount as the change in Bank Rate. But Bank Rate isn’t the only thing that affects interest rates on saving and borrowing. If Bank Rate changes, then normally banks change their interest rates on saving and borrowing. How Bank Rate affects your interest rates

It influences the rates those banks charge people to borrow money or pay on their savings. It's part of the Monetary Policy action we take to meet the target that the Government sets us to keep inflation low and stable.īank Rate determines the interest rate we pay to commercial banks that hold money with us. Our Monetary Policy Committee (MPC) sets Bank Rate. In the news, it's sometimes called the ‘Bank of England base rate’ or even just ‘the interest rate’.

News and publications Open News and publications sub menuīank Rate is the single most important interest rate in the UK.

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