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Benchmark Rate


In the realm of banking, it refers to the interest rate used as a benchmark lending rate. Many banks use the LIBOR rate, instead of the prime rate, as their benchmark rate to price loans offered to customers. The benchmark rate is calculated as an average of rates that banks charge to lend to each other in money markets. The prime rate (or the base rate in Britain) is the benchmark rate that banks use to lend to their credit-worthy customers.



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Banking is an integral part of the modern financial system and plays an important role in an economy. It basically involves the so-called intermediation (e.g., ...
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