Base Rate: The Decider of Many Fortunes

It is the interest rate based on which the creditors derive their rates of lending and savings products.

This rate is fixed periodically by the Bank of England's Monetary Policy Committee which meets every month. It enjoys an autonomous status, thus acts independently of the government. It decides the money supply which in turn makes it the key controller of the economy. Primary objective of this rate is to meet the inflation targets.

Presently it is referred as the Bank of England's UK Repo Rate. It is also known by many other names like the Bank Rate, Minimum Lending Rate, Minimum Band 1 Dealing Rate and the Dealing Rate. As of on 10th April 2008 it was 5%.If we analyze the trends from 2000 to 2008 the Base Rate in UK has come down to 5% from 6%. To prove the inflation control in the UK economy, this rate has never increased or decreased by more than 0.25%(except in Nov. 2001 when it fell by 0.50%), which augurs well for the consumers. From February 2001 to July 2003 it gradually climbed down to the lowest point of 3.50% during the period 2000-2008. From November 2003 to July 2007 the Bank Rate showed only positive growth save in August 2005 when it declined by 0.25%. between November 2006 to April 2008 it has remained at the 5% rate after going up and down marginally.

Looking at the trends we can very well summarize that the bank rate in UK has been managed very efficiently by the Central Bank.