A base rate is the interest rate charged by a central bank, such as the Bank of England or the Federal Reserve, to commercial banks on loans. The base rate may also be referred to as the bank rate or the base interest rate.
While commercial banks are free to set their own borrowing rates, the rates they charge on loans and offer on savings are typically derived from the base rate.

This means that, depending on the state of the economy, central banks can use base rates to encourage or discourage consumer spending.