The bank rate history
The Bank of England was established in 1694 to act as the English Government's banker. The chart below shows the base rate against the money supply and inflation (using the Consumer Prices Index) going back to 1694. The money supply and Consumer Prices Index are shown on logarithmic scales.
Bank of England Base Rate (long-term average is 4.7%), 31st of October 1694 to the 31st of December 2021.
Money supply data from the Bank of England
When the Bank of England was first established, the pound sterling was already in use as money and literally was a pound in weight of sterling silver. The Bank of England base rate was not used to create inflation but to attract savers or lenders to the government. Money had to be honest otherwise the government could not borrow.
From funding government to inflating away war debt to financial repression
Until 1912 (period A), inflation remained relatively stable, ending the period at about the same place as where it started. The average base rate over the period was 4.4% whilst the average yearly inflation was a mere 0.23%.
After 1912, the base rate gained traction as a mechanism for creating monetary inflation to fund the two world wars (Period B). There was short-lived reversal in inflation during the 1930s great depression, but after keeping base rates at 2% for two decades, what followed was the biggest rise in the money supply and consumer prices so far in the UK (Period C), with the base rate eventually peaking at 17% on 15th November 1979 as the Bank of England grappled with inflation.
The Bank of England, being incapable of learning anything from its past mistakes, reduced base rates during the 1990s to help fuel the housing bubble that led to the financial crisis (Period D). Once the financial crisis hit, the bank rate was reduced in steps from 5% in October 2008 down to 0.5% on 5th March 2009, and a new era of financial repression began.