Overnight Rate (redirected from Overnight capital cost)

Overnight Rate

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

Notes:

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.

See also: Bank Rate, Central Bank, Federal Funds Rate, Interest Rate, Monetary Policy