base rate
The term "base rate" is used in finance to denote a benchmark interest rate and in statistics to describe the underlying probability of an event in a population.
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Definition
C1Finance
(technical, economic)The standard interest rate set by a central bank that serves as a benchmark for other interest rates in the economy.
Example
- The central bank raised the base rate to control inflation.
- Commercial banks adjust their lending rates based on the base rate.
C1Statistics
(technical, academic)The underlying probability of an event occurring in a given population, used as a reference point in probability assessments.
Example
- The base rate of having the disease in the general population is 2%.
- Bayesian analysis often starts with the base rate before considering new evidence.
Similar
Terms that have similar or relatively close meanings to "base rate":