Glossary
What is the Policy Rate?
Central bank benchmark rate
Definition
A policy rate (or benchmark rate) is the interest rate a central bank charges commercial banks, which sets the floor for interest rates throughout the economy. Examples include Brazil's SELIC, Mexico's Banxico target rate and Chile's TPM.
Why it matters
Policy rates are the primary lever for managing inflation and growth. Rate decisions move currencies, bond yields and equity markets, making them essential for anyone tracking an economy.