What is the term for the interest rate at which Canadian financial institutions lend each other money on an overnight basis?

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Multiple Choice

What is the term for the interest rate at which Canadian financial institutions lend each other money on an overnight basis?

The overnight rate is the rate at which major Canadian financial institutions lend to each other for one day. It serves as the key benchmark for monetary policy—the target for this rate is set by the Bank of Canada and guides other short-term rates in the economy. The Bank Rate refers to the central bank’s own lending rate to banks, not the interbank market. The discount rate is the central bank’s rate for direct borrowing by banks in emergencies, not the regular interbank funding rate. The prime rate is the rate banks charge their best customers, not the overnight interbank market.

The overnight rate is the rate at which major Canadian financial institutions lend to each other for one day. It serves as the key benchmark for monetary policy—the target for this rate is set by the Bank of Canada and guides other short-term rates in the economy. The Bank Rate refers to the central bank’s own lending rate to banks, not the interbank market. The discount rate is the central bank’s rate for direct borrowing by banks in emergencies, not the regular interbank funding rate. The prime rate is the rate banks charge their best customers, not the overnight interbank market.

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