Sterling Overnight Index Average (SONIA)

The Sterling Overnight Index Average (SONIA) is a benchmark interest rate that reflects the cost of borrowing money overnight in the UK. It is based on actual transactions involving banks and financial institutions that lend to each other without collateral. Used mainly as a reference for financial contracts, SONIA provides a transparent, reliable measure of short-term interest rates in sterling. Its calculation is based on real market activity, making it a trusted indicator for pricing loans, derivatives, and other financial products in the UK financial system.