Overnight Bank Funding Rate

The Overnight Bank Funding Rate (OBFR) is the measure of wholesale, unsecured, overnight bank funding costs, calculated using federal funds transactions, certain Eurodollar transactions, and certain domestic deposit transactions. Calculations for this rate also include U.S. dollar deposits with a fixed overnight term and a negotiated interest rate that are booked in U.S. offices of banks. This interest rate at which a depository institution lends or borrows funds with another depository institution in the overnight market, with other countries relating to this interest rate in central bank sets to target monetary policy. Overnight rates are predictors of short-term interest rate movement in the broader economy and they can have a domino effect on various economic indicators such as employment and inflation.