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The Lending Facility Rate is the interest rate at which commercial banks can borrow overnight liquidity from the central bank against eligible collateral. It typically forms the upper bound of the interest rate corridor, providing a ceiling for market rates. This rate is a crucial tool for managing short-term liquidity and ensuring the stability of the banking system. Changes in this rate reflect the central bank's stance on monetary tightening or easing.
The rate is set by the central bank's governing body during scheduled monetary policy meetings based on inflation targets and economic growth objectives.