What is the base rate?

The base rate is the interest rate at the center of a country's interest rate system, set by the central bank after comprehensively considering prices, employment, growth, financial market conditions and so on.

When the base rate changes, short-term market interest rates move first, and it can then affect government bond yields, exchange rates, the stock market, and deposit and lending rates. However, actual market reactions depend on factors such as the inflation outlook and the central bank's signals about the future.