BASE RATE Meaning and
Definition
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Base rate refers to the predetermined interest rate established by a central bank or monetary authority, which serves as the benchmark for other lending and borrowing rates within an economy. It is also commonly known as the key rate, reference rate, or policy rate. The base rate acts as the foundation for various loan products, including mortgages, personal loans, and business loans.
The central bank employs the base rate to influence and regulate economic activity, primarily by controlling the cost of borrowing money. For instance, when the central bank increases the base rate, it effectively raises the borrowing costs for commercial banks. Consequently, this often leads to higher interest rates for consumers and businesses, as financial institutions pass on the increased costs to their customers.
In addition to influencing interest rates, the base rate serves as a signal of the central bank's monetary policy stance. By altering the base rate, the central bank can control inflation, manage economic growth, and stabilize the overall financial system.
Many commercial banks and lenders utilize the base rate as a reference point for determining the interest rate applicable to specific loans. These rates are usually set as a fixed percentage above or below the prevailing base rate. Consequently, changes in the base rate have a direct impact on the interest rates individuals and businesses are charged on their loans, affecting their cost of borrowing and overall ability to repay debt.
Common Misspellings for BASE RATE
- vase rate
- nase rate
- hase rate
- gase rate
- bzse rate
- bsse rate
- bwse rate
- bqse rate
- baae rate
- baze rate
- baxe rate
- bade rate
- baee rate
- bawe rate
- basw rate
- bass rate
- basd rate
- basr rate
- base sate
Etymology of BASE RATE
The word "base" originated from the Old French word "bas" meaning "low" or "bottom". It was derived from the Latin word "bassus", which carries the same meaning. "Rate", on the other hand, originated from the Old French word "rate" or "rata", which can be traced back to the Latin word "rata" meaning "reckoned" or "fixed". Therefore, the term "base rate" combines "base" referring to the lowest or fundamental value and "rate" indicating a fixed or calculated value. In financial terms, the base rate is the minimum interest rate set by a central bank that serves as a benchmark for lending rates in the economy.
Similar spelling words for BASE RATE
- boss radio,
- ten-ride pass,
- route base,
- piece rate,
- pussy riot,
- baccarat,
- rowdy boys,
- pace, rate,
- red buoys,
- root bass,
- puce red,
- bus rood,
- RATE BASE,
- ruwet boys,
- base radio,
- Base Ratio,
- base-rate fallacy,
- bus ride,
- BASE RIGHT,
- Road Pizza,
- pass rate,
- bus route,
- ride bus.
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