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Economics vocabulary · Central Banks and Interest Rates

Rate cut

Meaning in economics, with examples

nounCore term

In economics, rate cut means: A reduction in the central bank's main interest rate, usually made to make borrowing cheaper and to support growth and jobs.

In Turkish: faiz indirimi

How it is used

Markets expect, hope for or bet on rate cuts; central banks deliver them or start an easing cycle. As a verb phrase: the bank cut rates by a quarter point. Rate cuts usually come when inflation is falling or growth is weak.

Example sentences

  1. Investors are betting on a rate cut at the next meeting.

  2. The surprise rate cut weakened the currency against the dollar.

Common collocations

  • deliver a rate cut
  • expect a rate cut
  • a surprise rate cut
  • a quarter-point rate cut
  • rate hikeAn increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.
  • policy rateThe main interest rate set by a central bank, which guides the rates that banks charge each other, businesses and households.
  • dovishFavouring lower interest rates or looser monetary policy, usually because supporting growth and jobs seems more urgent than fighting inflation.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.
  • basis pointOne hundredth of a percentage point (0.01%), used to describe small changes in interest rates and bond yields precisely.

More terms: Central Banks and Interest Rates

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This page explains English vocabulary for learners. It is not financial advice.