The bank rate moves up and down to try to control inflation, which measures the overall rise in prices.
The increase in rates makes the credit more expensive, so people have less money to spend. People can also be encouraged to save maximum.
As a result, it reduces the demand for goods and increases prices, which is rising.
But this is a balanced process.
Once the price is increased, it is more controlled, the bank will consider reducing interest rates.
Its basic interest rates greatly affect the rates of high -street banks and other mini -lenders who charge consumers for loans, credit cards and other finance deals.
It is most clearly seen in the price of mortgage. Reducing the base rate will have an immediate impact on people with “trackers”.
About 629,000 mortgages have tracker deals. Generally, their monthly payment expected 0.25 percent points will result in a decline by about $ 29.
Many similar domestic people have variable rates deals, and if the bank reduces the rate of base, lenders will be pressured to reduce their rates.
The fixed rate deals do not change immediately, but the expected of further deductions gives borrowers a better deal.
Saveers will face a decrease in base rate, as they are likely to return from banks.
