Official bank rate

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The official bank rate (also called the Bank of England base rate[1] or BOEBR) is the interest rate that the Bank of England charges Banks for secured overnight lending. It is the British Government's key interest rate for enacting monetary policy.[2] 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 are transacted as 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%,[3] and this was kept on hold on 7 February 2019.[4]

History[edit]

The official bank rate has existed in various forms since 1694 and has ranged from 0.25% to 17%.[5] The name of this key interest rate has changed over the years. The current name "Official Bank Rate" was introduced in 2006[5] and replaced the previous title "Repo Rate" (repo is short for repurchase agreement) in 1997. Previously (between 1981 and 1997) the title was "Minimum Band 1 Dealing Rate" and prior to that the "Minimum Lending Rate".

See also[edit]

References[edit]

  1. ^ "Halifax: A to Z of Mortgages".
  2. ^ "How Monetary Policy Works".
  3. ^ "Interest & Exchange Rates | Official Bank Rate History". BankOfEngland.co.uk. Bank of England Statistical Interactive Database.
  4. ^ "Bank forecasts worst year for UK since 2009". BBC News. 7 February 2019. Retrieved 7 February 2019.
  5. ^ a b "CHANGES IN BANK RATE, MINIMUM LENDING RATE, MINIMUM BAND 1 DEALING RATE, REPO RATE AND BANK RATE" (PDF).