Question

What is meant by bank rate?

Answer 1

Bank rates are a key tool for credit control. The bank rate is the interest rate at which the central bank rediscounts other banks' first-class securities. The bank rate is variable, meaning that it is changed on a regular basis by the country's central bank.

According to Spalding, "The bank rate is the minimum rate at which the central bank rediscounts." The authorised securities or extends loans to other banks."