A bank rate is the interest rate charged by a country's central bank on funds borrowed by commercial banks and other depository institutions.

A bank rate is the interest rate charged by a country's central bank on funds borrowed by commercial banks and other depository institutions. The central bank of each country determines the bank rate, which changes based on monetary policy objectives.

A bank rate is an interest rate determined by a central bank and used when providing funds to commercial banks under certain circumstances. It is one of the tools central banks can use to manage economic activity and maintain price stability. When the bank rate rises, commercial banks may face greater costs when borrowing from the central bank. These higher costs can eventually be passed on to customers through increased loan and credit rates. More expensive borrowing can reduce spending and investment, helping to limit inflation. When the rate falls, banks may gain access to cheaper funding, potentially leading to lower borrowing costs for consumers and companies. This can encourage economic activity and investment. Bank-rate movements can also influence financial assets, currency exchange rates, and investor expectations. For this reason, financial markets often react to central bank decisions. While the specific role of a bank rate varies between countries, it remains an important part of monetary policy and central-bank operations.