The Base Rate is the interest rate set by a central bank or financial institution, which serves as the foundation for determining the interest rates on loans and other financial products. In Cyprus, for example, the Central Bank sets the Base Rate, which acts as a reference for banks when offering credit. Banks then add a margin or percentage to this Base Rate to calculate the interest rate offered to customers. The Base Rate is influenced by macroeconomic factors, including inflation, market conditions, and monetary policy decisions, making it an important financial tool for regulating economic activity.