WHAT'S THE DIFFERENCE BETWEEN THE OVERNIGHT RATE, THE BANK RATE AND - ProProfs Discuss
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What's the difference between the overnight rate, the bank rate and the prime rate?



Asked by DIAZ, Last updated: Apr 07, 2022

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

The overnight rate represents the interest rate at which major participants in thecanadian payments association lend one-day funds to each other. the bank ofcanada would like to keep this rate between two operating bands. the upper bandrepresents a level that the overnight lending rate should not exceed.the upper band is also known as the bank rate. the bank rate is the minimum rate atwhich the bank of canada lends money to those that participate in the canadianpayments association.the prime rate prime refers to the rate at which banks charge their best customers.if you wanted to rank the rates numerically from highest to lowest:prime rateupper operating band (also known as the bank rate)target for the overnight rate of interestlower operating band
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