The interest rate that banks charge other banks for loans is the
Federal funds rate
The interest rate that banks charge other banks for loans is referred to as the interbank lending rate. This rate is also known as the overnight rate as it is typically the rate at which one bank lends money to another bank for a period of just one day.
The interbank lending rate is determined by a variety of factors, including the state of the economy, inflation rates, and central bank policy. In some countries, the central bank plays a direct role in setting the interbank lending rate, while in others it is determined by market forces.
Banks often use the interbank lending rate as a benchmark for setting other interest rates. For example, a bank may use the interbank lending rate as a basis for determining the interest rate on personal loans, mortgages, and other types of credit products. The interbank lending rate is an important indicator of the health of the banking system and the overall economy, as it reflects the cost of borrowing money among banks.
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