How does the Bank of England lend to banks?

The Bank of England lends to banks primarily at the base rate set by its Monetary Policy Committee. This base rate is a critical tool used to influence the economy; it serves as the benchmark interest rate for the banking system. When the Bank of England adjusts this rate, it affects borrowing and lending rates across the financial sector, which can subsequently influence consumer spending, investment, and inflation.

By lending at the base rate, the Bank ensures that its lending practices are aligned with broader economic goals. This approach allows the Bank to effectively manage monetary policy, stabilizing prices and promoting economic growth. When commercial banks borrow from the Bank of England, they do so at this established rate, which reflects current economic conditions and guides overall lending behavior in the banking sector.

In this context, other choices may suggest approaches that do not accurately reflect the Bank of England's lending practices or its goals in terms of monetary policy. The base rate is central to the workings of the UK's monetary system, making it the correct answer.