Policy rate

The benchmark interest rate set by a central bank, which the rates institutions offer savers and charge borrowers are set with reference to.

Example

With a policy rate of 4.00% and an instant-access account paying 1.20%, the institution is retaining 2.80 percentage points.

It is a reference, not an entitlement. Nothing obliges an institution to pass on any particular share of it, in either direction or on any timetable.

Rate pass-through — The share of a change in the central bank's policy rate that an institution actually passes on to its savers.
Bank deposit — Money handed to a bank in exchange for a claim on it. The bank owns the money and lends most of it out; what you hold is a debt that institution owes you, repayable on the terms of the account.
Inflation — The general rise in prices over time, which reduces how much a given amount of money can buy.

Interest, and a rate somebody else can change — The whole return is a rate applied to a balance. What makes it unlike every other asset class is that the rate is set by the institution, can be changed at will, and you have agreed to that in advance. (10 min)
The spread between the policy rate and what you are offered — There is no market price here. The price is the gap between what the central bank sets and what the institution passes on - and that gap widens and narrows in a pattern that is not symmetric. (11 min)
Appraising one account: rate, access, cover and the expiry date — Six checks on one specific account. The headline rate is the one everybody runs and the only one that can be withdrawn without warning - so it belongs fourth, not first. (12 min)
No earnings, no dividends - just relative rates, inflation and flows — A currency has no cash flow to value. Its price reflects interest rates, inflation, trade and capital flows and sentiment, and forward prices are set mechanically by interest rate differences. (11 min)
A loan's rate is a stack: base rate, expected loss, illiquidity and fees — Private loans are priced by building up from a risk-free rate, adding compensation for defaults, for being unable to sell, and for the intermediary. Values between lending and repayment are mostly estimates. (11 min)