Official bank rate

From Wikipedia, the free encyclopedia

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 British Government'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] It has since increased twelve times to its current rate of 4.5% as of 11 May 2023.[5]


The official bank rate has existed in various forms since 1694 and has ranged from 0.1% to 17%.[6] The name and meaning (depositing vs lending) of this key interest rate has changed over the years. The current name, Official Bank Rate, was introduced in 2006[6] and replaced the previous Repo Rate (repo is short for repurchase agreement) in use since 1997. Previously (between 1981 and 1997) the name was Minimum Band 1 Dealing Rate and prior to that the Minimum Lending Rate.

Interest rates, 1800–2020

See also[edit]


  1. ^ "How Monetary Policy Works".
  2. ^ "Interest & Exchange Rates | Official Bank Rate History". 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. ^ "Bank of England raises UK interest rates to 4.5%". The Guardian. 11 May 2023. Retrieved 11 May 2023.
  6. ^ a b "Further details about wholesale - baserate data". Bank of England.{{cite web}}: CS1 maint: url-status (link)