What is the base rate?
The base rate, officially called Bank Rate, is the interest rate the Bank of England pays on money that banks hold with it. It sets the tone for interest rates across the UK, including mortgages, loans and savings. It was 3.75% after the Bank's September 2026 decision.
The Bank of England's Monetary Policy Committee (MPC) sets Bank Rate eight times a year. Its main job is to keep inflation at 2%. If inflation is too high, the MPC can raise the rate so borrowing costs more and people spend less. If the economy is weak and inflation is low, it can cut the rate to encourage spending. In September 2026 the MPC held Bank Rate at 3.75%, with three of its nine members voting to raise it. Changes reach ordinary people fast. Tracker and variable mortgages move with Bank Rate, and new fixed deals usually follow market expectations. Savers tend to earn more when rates are high. Higher rates also raise the government's own borrowing costs. Bank Rate had been cut in steps from a peak of 5.25%, reached in August 2023.
The left often worries that high rates hurt borrowers, renters and jobs, and some want the Bank to give more weight to employment.
The right usually backs an independent Bank that raises rates firmly to stop inflation becoming entrenched.
Britain is split. Now you decide.
In Population Decides the Bank of England reacts to the inflation your policies create, and rate rises can squeeze your voters' mortgages.
Play Population Decides freeCommon questions
Who sets the base rate?
The Bank of England's nine-member Monetary Policy Committee. Ministers do not set it.
How does the base rate affect my mortgage?
Tracker and variable mortgages change soon after a rate change. Fixed rates stay the same until your deal ends.