The Probert Encyclopaedia of Money

BASE RATE

In economics the base rate is the rate of interest used by the commercial banks as a basis for the rates they charge their customers. The base rate is an informal name for the rate at which the Bank of England lends to the discount houses, which effectively controls the lending rate throughout the banking system. The abolition of the minimum lending rate in 1981 heralded a loosening of government control over the banking system, but the need to increase interest rates in the late 1980s (to control inflation and the balance of payments deficit) led to the use of this term in this sense.
Research Base Rate