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For those like me who didn't know what the over night rate is: "The overnight rate is the interest rate at which major financial institutions borrow and lend o

• bryanlarsen 9y ago
  More importantly, the "prime rate" at the banks almost always is relative to the overnight rate, and almost all short term or floating interest rates are relative to the prime rate.
• delinka 9y ago
  I'm not sure I understand "target" in this context. Does it mean "a suggested rate" or "lowering/increasing the current rate over time toward this target" or "the actual rate"?
  • toomuchtodo 9y ago
    It is a rate they attempt to achieve through their actions. They can influence the rate, but not outright set it due to market conditions. Think of it like setting the temp on a thermostat. You are attempting to achieve a temperature through the use of a device to put energy into a system, but there are other factors that contribute to the actual temperature achieved.
    • delinka 9y ago
      Excellent details. Thanks.
    • sparky_z 9y ago
      I'd say it's more like adjusting the input voltage to the AC directly than simply setting the thermostat. They have to monitor the results and changing conditions and then make adjustments manually, rather than rely on an automatic feedback loop.
    • IBM 9y ago
      Just to be clear, the Bank of Canada can control the overnight rate if it moves outside of the "operating band" by directly intervening in the market with overnight repo and reverse repo operations [1]. [1] http://www.bankofcanada.ca/2015/10/overnight-repo-overnight-reverse-repo-operations/ http://www.bankofcanada.ca/2015/10/overnight-repo-overnight-...
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