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Simple English definitions for legal terms
bank rate
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A quick definition of bank rate:
Bank rate refers to the interest rate that a central bank charges commercial banks for borrowing money. This rate is set by the central bank and can affect the interest rates that commercial banks charge their customers for loans and other financial products. Essentially, the bank rate is a tool used by central banks to influence the economy by controlling the amount of money in circulation and the cost of borrowing.
A more thorough explanation:
Definition: The bank rate is the interest rate at which a central bank lends money to commercial banks. It is also known as the discount rate.
Example: If the bank rate is set at 2%, it means that commercial banks can borrow money from the central bank at a 2% interest rate. This can influence the interest rates that commercial banks charge their customers for loans and mortgages.
Explanation: The bank rate is an important tool used by central banks to control the money supply and inflation. By increasing the bank rate, the central bank can make it more expensive for commercial banks to borrow money, which can lead to higher interest rates for consumers and businesses. On the other hand, lowering the bank rate can make it cheaper for commercial banks to borrow money, which can lead to lower interest rates for consumers and businesses.