Is the base rate set by the Bank of England the same as the interest rate set by individual banks?

The base rate set by the Bank of England serves as a benchmark for interest rates in the economy, including the rates that individual banks offer to their customers. However, individual banks can set their own interest rates based on various factors, such as their funding costs, competition, the risk profile of borrowers, and their business strategy.

This means that while the base rate influences the overall interest rate environment, it does not dictate that banks must offer the same rates. Banks may provide higher or lower rates compared to the base rate, reflecting their unique assessments and market conditions.

As such, the notion that they can differ is accurate, which is why the chosen answer is correct. Understanding the relationship between the base rate and individual bank interest rates is crucial for comprehending broader financial and economic mechanisms, as well as for individuals making borrowing or investment decisions.