Hi Nata,
Yes, the widely quoted bank base rate is the same thing as the short term rate. It's just the rate at which institutions can borrow cash from the Bank of England for short terms. This rate in turn obviously drives the pricing of everyone else who offers short term funds and this in turn influences the supply of money in the economy - giving the link with inflation.
Of course, at the moment, that relationship, like so many others, is not particularly reliable...
Last edited by a moderator: Feb 4, 2010