INTEREST RATES

The description of interest rates:

Federal Funds Rate – the interest rate, at which the bank-members of The Federal Reserve System draw short-term credits overnight. The decision about the fluctuation of the rate in federal funds is covered by the Federal Open Market Committee (FOMC) terms of reference. The decision about fluctuation of the key interest rate in the USA is made by the Federal Open Market Committee (FOMC) of the Federal Reserve System of the USA during its meetings. The Committee holds 8 meetings per year concerning the question of the key interest rates fluctuation. The meetings are usually held on Tuesdays. The first and the fourth meetings in the year are the exceptions, because they are usually held for two days (Tuesday and Wednesday). The result of the meeting is announced at 6.15 pm GMT either on the day of the meeting or on the second day of the meeting if it is held for two days. The Minutes of the meeting are published few days after the next meeting.

Refinancing Tender - the European analogue of the Federal Funds Rate. Refinancing Tender is an interest rate, which is minimum possible for requests for funds obtaining in the tender of European Central Bank. ECB holds a tender each two weeks to float funds, which is necessary for upholding the liquidity in the standard. The decision about key interest rates fluctuation in Europe is made by the Governing Council of European Central Bank. Since the 7th of January 1999 the Council meetings are held on Thursdays once in two weeks. The exceptions in the meetings schedule are made only on holidays and during the period of summer vacations in ECB.

Repo Rate – interest rate at which Bank of England offers credits according to the repossession scheme, i.e. Bank of England buys the short-term stocks from the banks with obligation to sell them to those banks in certain stipulated time. The decision about key interest rates in the UK is made by Bank of England Monetary Policy Committee on its monthly meetings. The meeting of Bank of England Monetary Policy Committee is held for two days. Usually it is Wednesday and Thursday which follow the first Monday of each month. But sometimes there are exceptions when the meetings are held on Tuesday and Wednesday. The result of the Monetary Policy Committee meeting is announced at noon GMT on the second day of the meeting. The Minutes of meetings are published on Wednesday following the week of the meeting.

3 Month LIBOR (London Interbank Offered Rate) Range - the range for three months loans. Swiss National Bank establishes the corridor with the range of one percent in which it is determined to hold the 3 Month LIBOR interest rate.

Overnight Call Rate Target – Japanese analogue of Federal Funds Rate. It is the interest rate at which Bank of Japan draws overnight credits.

Last update: November 13, 2008.