Glossary · UK
What is Base Rate?
The Bank of England's official interest rate, set by the Monetary Policy Committee (MPC), which influences mortgages, savings rates, and the wider UK economy.
Full Definition
The Base Rate (also called the Bank Rate) is the interest rate set by the Bank of England's Monetary Policy Committee (MPC), which meets eight times a year to assess inflation and economic conditions. It is the most influential interest rate in the UK economy because it determines the rate at which the Bank of England lends to commercial banks overnight, and commercial banks then pass changes through to consumers and businesses. When the Base Rate rises, variable-rate mortgage repayments increase and savings accounts typically offer better returns; when it falls, the reverse happens. Tracker mortgages follow the Base Rate directly, usually at a fixed margin above it (e.g. Base Rate + 1%). Standard Variable Rate (SVR) mortgages are influenced by it but lenders can set their own SVR independently. The Base Rate also affects the competitiveness of the pound and, indirectly, inflation through import prices. As of 2026 the MPC has been navigating the balance between bringing CPI inflation back to its 2% target and supporting economic growth. Always check the MPC's latest decision on the Bank of England website before making borrowing or saving decisions.