Official bank rate


The official bank rate is the interest rate that the Bank of England charges Banks for secured overnight lending. It is the British Government's key interest rate for enacting monetary policy. It is more analogous to the US discount rate than to the federal funds rate. The security for the lending can be any of a list of eligible securities and are transacted as overnight repurchase agreements. Changes are recommended by the Monetary Policy Committee and enacted by the Governor.
On 2 August 2018 the Bank of England base rate was increased to 0.75%, but then cut back to 0.25% on 11 March 2020 as an emergency measure in the wake of Covid-19 pandemic. This was further cut to an all time low of 0.1% on the 19 March 2020.

History

The official bank rate has existed in various forms since 1694 and has ranged from 0.1% to 17%. The name of this key interest rate has changed over the years. The current name "Official Bank Rate" was introduced in 2006 and replaced the previous title "Repo Rate" in 1997. Previously the title was "Minimum Band 1 Dealing Rate" and prior to that the "Minimum Lending Rate".