What is the benchmark rate?

Míra, as it sounds, is the interest rate that serves as a benchmark that evaluates other interest rates. The benchmark rate is the lowest interest rate and fluctuates in response to a wide range of pressures. Many people use the interest rate set by central banks as a comparative rate, with all other interest rates bound to this scale. The government wants to maintain a sufficiently low enough to promote lending and financial growth, but not so low that there is no opportunity to profit. In fact, central banks have set several interest rates; The rate of most interest is the rate for lending overnight. The return on such securities is low, but they are also low as they are supported by pathway. Interest rates for other types of securities are higher and potentially generate more yields, even if they are also associated with other risks. If interest rates are set, people are considering a reference interest rate because potential buyers will not be securitiesu buy products that would provide low interest.

Benchmark also uses banks and other creditors to determine interest rates for their financial products such as credit cards, housing loans and car loans. Historically, banks used the benchmark interest rate to determine the main rate, the lowest interest they offer, and interest was offered in terms of the main rate plus another percentage. For low -risk debtors, a main rate loan could be obtained, while high -risk debtors would have to take a higher rate. Today, the main rate and comparative rate may vary.

Even for people who do not plan to invest or accept a loan, it can be useful to pay attention to the reference rate and its fluctuations. Most newspapers announce changes in the rate as well as broadcasting news. Changes in degrees may be warning signals that the government is concerned about the flow of funds; If, for exampleIndeed, dramatically reduced, suggests that officials are afraid of freezing credit. If the rate is increased, this may indicate that the economy is in good condition, so the government is not worried about loan motivation.