Bank of England Base Rate Explained

The Bank of England base rate is the interest rate the Bank pays commercial banks for reserves held with it. It sets the floor for every other rate in the UK economy.

Decisions are made by the nine-member Monetary Policy Committee, which meets eight times a year and votes openly. The Bank publishes both the decision and the voting split.

When the base rate moves, mortgages, savings accounts, business loans, gilts and even sterling all respond. The full effect on the real economy takes 12 to 18 months.

You do not need to predict rate moves. You need to understand the direction of travel so you can decide whether to fix a mortgage, lock in a savings deal, or extend bond duration.