Bank of England Bank Rate

What Bank Rate is

Bank Rate is the interest the Bank of England pays to banks, building societies and other firms on the money they hold with it, and the rate it charges when it lends to them. Because that is what money costs the banks at the margin, it sets the floor that every other sterling interest rate is priced from. The Bank describes it as the tool it uses to bring inflation back to the government's 2% target.

The rate is set by the Monetary Policy Committee, nine people who meet eight times a year. Most meetings leave the rate where it is, so the history below is short for a fifty-year series: it records only the days the rate moved, and the level it moved to. A decision is announced at noon and takes effect the same day.

How a change reaches your mortgage

A change in Bank Rate reaches different mortgages at different speeds, and some not at all until a deal ends.

• Tracker mortgages are written as Bank Rate plus a fixed margin, so the rate you pay moves by the same amount. Your offer says when: usually from the next monthly payment.
• Fixed-rate mortgages do not move during the fixed period. A cut today helps you only when you remortgage, and by then the fixed rates on offer will reflect where lenders expect Bank Rate to go next, not where it is now. That is why new fixed rates often fall before a cut and rise before a rise.
• Standard variable rates are set by each lender. They usually follow Bank Rate in the same direction, but the lender decides by how much and when, so check the letter it sends you.

To see what a change means in pounds, put the new rate into the mortgage calculator: on a repayment mortgage, the monthly payment moves by more early in the term, when most of each payment is interest.

How it reaches your savings

Easy-access savings rates tend to follow Bank Rate down quickly and up slowly, because a bank pays what it must to keep your deposit rather than what it can afford. Fixed-term bonds and fixed-rate ISAs lock in the rate on the day you open them, so a fixed account opened just before a cut keeps paying the higher rate to the end of its term.

The savings goal calculator and the compound interest calculator both take the rate on your account, not Bank Rate. Use the rate your provider quotes as AER; Bank Rate is the benchmark it is priced against, not what it pays.

Reading the chart and the table

The chart draws the rate as steps, because that is how it behaves: it stays exactly where the committee put it until the next change. The table lists every change since the Bank's daily series begins on 2 January 1975, newest first, with the size of each move in percentage points. The full series downloads as a CSV with the same dates and values the Bank publishes.

Before May 1997 the decision was the Chancellor's, and over the years the policy rate has gone by other names. The Bank publishes the whole run under one series code, IUDBEDR, and this page reproduces it without adjustment.