Base Interest Rate

The Base Interest Rate (base rate) is a percentage value that central banks set as a guide for the financial sector as to define the price of credit in a country. The base rate depends on supply and demand for credit. Other banks borrow money from the central bank at the base rate and then set their own rates for their customers. A certain country’s base rate has a direct influence on the value of said country’s currency. This makes monitoring its changes a useful indicator for traders of forex.