What is bank rate? How to use in English

The origin of the term "bank rate" can be traced back to medieval Europe when public authorities would lend money to wealthy merchants at a high-interest rate as collateral for loans. As banks became more prevalent in the 17th and 18th centuries, they began to offer loans to both individuals and businesses at lower interest rates. These rates were known as "bank rates," and they were set by the banks themselves in response to economic conditions and competition. In the 19th century, banks began to come under the regulatory oversight of governments, and central banks were created to manage the money supply and stabilize the economy. These banks, such as the Bank of England, established a fundamental role in setting interest rates through the concept of the "bank rate." The bank rate was the interest rate at which the central bank would lend funds to commercial banks, and it served as a benchmark for other lending rates in the economy. The bank rate was crucial because it impacted the cost of borrowing for consumers and businesses, influenced the attractiveness of deposits, and controlled inflationary pressures. Banks sought to maintain profitable lending and deposit practices, and they would align their lending rates with the bank rate to remain competitive. Bondholders and investors also used the bank rate as a way to assess the health of the economy and the likelihood of inflation. Today, the term "bank rate" is commonly used to refer to the interest rate set by a central bank as it significantly affects various financial transactions, such as loans, mortgages, and commercial loans. The bank rate is not necessarily the interest rate at which commercial banks make loans to the public, as loans are generally higher than the bank rate due to operational costs, risk assessments, and other factors. Nonetheless, it forms the fundamental backbone of interest rates and lending conditions in the economy.