Bank Base Rates
Bank Base Rates
The Bank of England Base Rate is the interest rate set by the Bank of England, which functions both as the bank for the British Government as well as a bank for bankers.
The base rate is reviewed monthly by the Bank of England's Monetary Policy Committee and changed to reflect the needs of the economy, reflecting factors such as inflation and employment levels.
A wide range of financial products including loans, mortgages, savings and investments track the Bank of England base rate of interest within certain parameters.
A lowering of the base rate may adversely affect savers as financial institutions will generally follow the Bank of England's lead and lower their own rates for saving products. For borrowers particularly those with mortgages a reduction in the base rate will often result in monthly interest rates being reduced but it will depend on the policy of the individual lender. The converse is true if base rates go up.