Overnight Rate

Overnight Rate
The interest rate at which a depository institution lends immediately available funds (balances within the central bank) to another depository institution overnight.

In countries where central banks exist, this provides for an efficient method whereby banks can access short-term financing from central bank depositories. As the overnight rate is influenced by the central bank, it is a good predictor for the movement of short-term interest rates.

In the U.S., this is referred to as the Federal Funds Rate.

Investment dictionary. . 2012.

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