Meaning
A crucial monetary policy tool, this rate impacts the cost of borrowing for commercial banks.Definition
The Bank Rate is the interest rate at which a country’s central bank provides short-term loans to commercial banks.How It Works
An increase in the Bank Rate makes borrowing more expensive for commercial banks, leading to higher loan rates for customers. Conversely, a decrease makes borrowing cheaper.Purpose
Its main purpose is to manage inflation, stabilize the economy, and influence overall lending rates for financial stability.Author
