An overnight interbank unsecured loan involves one bank entering into an agreement to borrow from another bank a sum, K, with the promise to repay the following working day an amount equal to this sum plus interest, K(1 + r), where r is the overnight interest rate. Provided that the two banks are not customers of the sameThe overnight rate is generally the interest rate that large banks use to borrow and lend from one another in the overnight market. In some countries (the United States of America, for example), the overnight rate may be the rate targeted by the central bank to influence monetary policy. In most countries, the central bank is also a participant on the overnight lending market, and will lend or borrow money to some group of banks. Overnight interest rates, The market for overnight loans Overnight rate - WikipediaOvernight Rate Definition - Bank Funding Rate - FEDERAL RESERVE BANK of NEW YORK21/07/2021 · The overnight lending market is an alternate source of funds that the Fed can use to promote its policy goals without raising interest rates. Over the last year, there has been a growing discrepancy between the rates paid on short-term Treasuries and the effective federal funds rate.

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