Bank rate is the rate at which commercial bank can borrow money from central bank.
A risk in bank rate would discourage the commercial banks to build their cash reserves for the creation of credit through loans. This reduces the supply of money by the commercial banks. During inflation, central bank increases bank rate when the supply of money need to be curbed. On the other hand, a fall in a bank rate induces commercial banks to build their cash reserves for the creation of credit. During deflation central bank decreases the bank rate when the supply of money needs to be increased.