UK short-term interest rate

[natashalie]

Hi,

Referring to Chapter 13 course notes solution Q13.4, it mentioned that short-term interest rates tend to be higher when inflation is higher...

Then, I went to the Bank of England website to look for current short-term interest rate values. On the front page, there is current bank rates and current inflation rate. I wonder the current bank rates implies short-term interest rates in the notes? [ http://www.bankofengland.co.uk/index.htm]

Would like to get real data to assist memory.

If not, would anyone know where can I obtain the uk short-term interest rate the notes referring to please?

Thank you very much.

Nata

 

[Calum]

If not, would anyone know where can I obtain the uk short-term interest rate the notes referring to please?

Thank you very much.

Nata

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...