Bank rate,
Definition of Bank rate:
A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is a method by which central banks affect economic activity. Lower bank rates can help to expand the economy by lowering the cost of funds for borrowers, and higher bank rates help to reign in the economy when inflation is higher than desired.
The bank rate in the United States is often referred to as the federal funds rate or the discount rate. In the United States, the Board of Governors of the Federal Reserve System sets the discount rate as well as the reserve requirements for banks.
Interest rate at which a central bank will advance short term loans to commercial banks. Changes in bank rate are reflected in the prime lending rates offered by commercial banks (to their best customers), which in turn affect investments such as bank deposits, bond issues, mortgages. This term has largely been replaced by newer terms base-rate and prime rate.
Meaning of Bank rate & Bank rate Definition
Bank Rate
The discount rate is the interest rate that the central bank uses to lend to commercial banks.
