Define bank rate

The bank rate is the rate at which the central bank of a country lends money to commercial banks to meet their long-term needs.

Additional Information:-

A bank rate is a monetary tool to control the money supply in the country.

An increase in Bank rate increases the cost of borrowing from the central bank, which leads to an increase in lending rates by commercial banks.

It discourages borrowers from taking loans, which reduces the ability of commercial banks to create credit.

A decrease in Bank rate decreases the cost of borrowing from the central bank, which leads to a decrease in lending rates by commercial banks.

It encourages borrowers to take loans, which increases the ability of commercial banks to create credit.