Okuzeka
Economics vocabulary · Central Banks and Interest Rates

Rate hike

Meaning in economics, with examples

nounCore term

In economics, rate hike means: An increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.

In Turkish: faiz artırımı, faiz artışı

How it is used

An informal news word, especially common in American English; British reports often say rate rise. Central banks deliver or pause rate hikes, and markets price in further hikes. Hike is also a verb: the bank hiked rates by half a point.

Example sentences

  1. The rate hike of 50 basis points was larger than markets had expected.

  2. After a series of rate hikes, mortgage costs have almost doubled.

Common collocations

  • a series of rate hikes
  • pause rate hikes
  • deliver a rate hike
  • aggressive rate hikes
  • rate cutA reduction in the central bank's main interest rate, usually made to make borrowing cheaper and to support growth and jobs.
  • policy rateThe main interest rate set by a central bank, which guides the rates that banks charge each other, businesses and households.
  • hawkishFavouring higher interest rates or tighter monetary policy because controlling inflation is seen as the top priority.
  • interest rateThe price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.
  • 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.