b

base rate

The UK base rate is the equivalent to the prime rate in the United States, generally the average interest rate that British banks charge to their customers.


Higher interest rates make holding the sterling more attractive to foreign investors, and the higher level of demand will place upward pressure on the value of the pound. However, higher interest rates make borrowing less attractive which slows investments, consumption, and employment leading to slower economic growth. On the other hand, a reduction in interest rates makes saving less attractive and borrowing more attractive, which stimulates spending and faster economic growth.

Still, lower interest rates make holding the sterling less attractive to foreign investors and the lower level of demand will place downward pressure on the value of the pound.







Learn More About How Economics Move Markets

Related Words