Official bank rate

In the United Kingdom, the official bank rate is the rate that the Bank of England charges banks and financial institutions for loans with a maturity of 1 day. It is the Bank of England's key interest rate for enacting monetary policy.[1] It is more analogous to the US discount rate than to the federal funds rate. The security for the lending can be any of a list of eligible securities (commonly gilts) and the transactions are overnight repurchase agreements. Changes are recommended by the Monetary Policy Committee and enacted by the Governor.

On 2 August 2018 the Bank of England base rate was increased to 0.75%,[2] but then cut to 0.25% on 11 March 2020,[3] and shortly thereafter to an all-time low of 0.1% on 19 March, as emergency measures during the COVID-19 pandemic.[4] On 15 December 2021, the Monetary Policy Committee voted 8-1 to increase the bank rate to 0.25%, and subsequently increased it thirteen more times to 5.25% on 02 August 2023.[5] As of 21 August 2024 the bank rate sits at 5%.[6]

  1. ^ "How Monetary Policy Works".
  2. ^ "Interest & Exchange Rates | Official Bank Rate History". BankOfEngland.co.uk. Bank of England Statistical Interactive Database.
  3. ^ "UK interest rates cut in emergency move". BBC News. 11 March 2020. Retrieved 13 March 2020.
  4. ^ "Monetary Policy Summary for the special Monetary Policy Committee meeting on 19 March 2020". Bank of England. 19 March 2020. Retrieved 19 March 2020.
  5. ^ "Interest rates and Bank Rate". www.bankofengland.co.uk. 1 August 2024. Retrieved 21 August 2024.
  6. ^ "Interest rates and Bank Rate". www.bankofengland.co.uk. 1 August 2024. Retrieved 21 August 2024.