Interest Rates on Accounts with Variable Rates

Question 1

Do rates on accounts with variable rates generally move in line with bank rates?

Answer 1

Yes

Question 2

Who sets bank rates?

Answer 2

Monetary Policy Committee

Question 3

How are rates set?

Answer 3

Set at a level that MPC believes will help it in achieving inflation rate objectives.

Question 4

What are the central banks remit?

Answer 4

Maintain low inflation (2%)
Economic Stability
Provide good conditions to promote growth, economic output and employment.

Question 5

What does the central bank do?

Answer 5

Aims for non inflationary growth that sustains economic growth while maximising employment potential

Question 6

What happens if the economy overheats?

Answer 6

Interest rates may rise to discourage borrowing to moderate economic activity.

Question 7

Are deposit takes in competition with one anoth?

Answer 7

Yes- interest rates reflect the competitive market conditions, credit risk profiles and concerns among deposit takers.