The Overnight Borrowing Rate is a key monetary policy tool representing the interest rate at which commercial banks can borrow funds from the central bank for a single night. This rate serves as a floor or ceiling for short-term market rates and is used by the central bank to manage liquidity within the banking system. It is a primary indicator of the central bank's stance on inflation and economic stability.
The rate is determined and announced by the Central Bank's Monetary Policy Committee following their periodic review meetings. It is based on an assessment of macroeconomic indicators such as inflation, employment, and GDP growth.