Macroeconomics
Policy Rate
Definition
What is Policy Rate?
The benchmarkA reference index or rate used to evaluate a fund's performance. interest rateThe price of borrowing money or the return paid for lending it. set or targeted by a central bank to influence financial conditionsThe combined influence of rates, credit spreads, asset prices, currency values, and lending availability..
Example in practice
How This Looks in Practice
A policy-rate increase tends to raise short-term borrowing costs.
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