What is this base rate in banking that all are talking about?
Feds fund rate In the United States, the federal funds rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. It is the interest rate banks charge each other for loans.
“Base rate” can be defined as any number of reported interest rates. Some of the usual suspects for this are, the LIBOR (London Inter-Bank Overnight Rate), New York overnight intra-bank rate, the US Federal Reserve overnight window rate, T-bill rates and T-bond rates. In some contracts, or in the case of offered bank savings account, the base rate is a formula, typically based off of another rate +/- an additional specified amount. You will need to look at the context in which the term is used. If it is in a contract or offering/marketing materials, then the term will be specifically defined.
