Your mortgage interest rate is decided by your lender. But often, these are influenced by the ‘Base Rate of interest’, set by the Bank of England, which is the UK’s central bank.

It’s the bank that the government (and lots of others, including other banks) does its banking with.

It’s an independent public organisation that has a clear mandate: to support the economic policies of the government of the day, while monitoring and maintaining financial stability in the UK.

One of the things it helps the government to do is control inflation. And despite its close links to the government, it remains independent when deciding how it goes about doing that.

One of the chief ways it helps to control inflation is through the Bank of England Base Rate. This interest rate dictates how cheaply other banks can borrow from the Bank of England, and in turn how much interest gets applied to our mortgages and loans.

The Bank of England’s Monetary Policy Committee meet eight times a year to discuss the Base Rate and what it plans to do with it. The Committee is made up of nine people, including four who have been appointed by the government. Each member of the Committee has expertise in the field of economics and monetary policy.

Its decisions have a real impact right across society.

Higher interest rates can dampen demand, encourage people to spend less, and keep prices lower; lower interest rates can increase demand, encourage spending, and help the economy grow.

Understandably, governments often want to keep prices affordable for people (by keeping inflation down), while encouraging investment that supports economic growth (by keeping interest rates reasonable). So the Committee must perform a fine balancing act if it’s to meet the Bank’s mandate, and successfully support the government in delivering its (competing) twin aims.