The interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Lower bank rates can help to expand the economy, when unemployment is high, by lowering the cost of funds for borrowers. Conversely, higher bank rates help to reign in the economy, when inflation is higher than desired.
The bank rate can also refer to the interest rate which banks charge customers on loans.
In the U.S., the bank rate is often referred to as the federal funds rate. The bank rate is set indirectly by the Federal Open Market Committee (FOMC) which buys or sells treasury securities to regulate the money supply. These actions serve to push the effective federal funds rate closer to the targeted rate. Regulation of the economy through management of the money supply is referred to as monetary policy.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
bank rate — ➔ rate1 * * * bank rate UK US noun [C] BANKING, FINANCE ► the rate of interest that is set by a central bank, and which is the lowest rate at which it lends money to other banks. This rate affects the interest rates which are then charged to… … Financial and business terms
bank rate — bank rates N COUNT The bank rate is the rate of interest at which a bank lends money, especially the minimum rate of interest that banks are allowed to charge, which is decided from time to time by the country s central bank. ...a sterling crisis … English dictionary
bank rate — n the rate of ↑interest charged by banks lending money, decided by a country s main bank = ↑interest rate … Dictionary of contemporary English
bank rate — n. a standard rate of discount set by a central bank or banks … English World dictionary
bank rate — bank ,rate noun count the rate of interest that banks use to calculate how much interest to charge on money they lend to each other instead of to their customers … Usage of the words and phrases in modern English
Bank rate — For the company, see Bankrate. Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the … Wikipedia
bank rate — noun the discount rate fixed by a central bank • Hypernyms: ↑discount rate, ↑discount, ↑bank discount * * * noun Etymology: bank (IV) : the discount rate fixed by a central bank (as by the Bank of England) … Useful english dictionary
bank rate — UK / US noun [countable] Word forms bank rate : singular bank rate plural bank rates the rate of interest that banks use to calculate how much interest to charge on money they lend to each other rather than to their customers See: base rate … English dictionary
bank rate — rate of interest fixed by a bank, discount rate … English contemporary dictionary
bank rate — / bæŋk reɪt/ noun 1. the discount rate of a central bank 2. formerly, the rate at which the Bank of England lent to other banks (then also called the Minimum Lending Rate (MLR), and now called the base rate) … Dictionary of banking and finance