Sterling Overnight Interbank Average Rate

The Sterling Overnight Interbank Average Rate (SONIA) is the interest rate at which major banks in the UK lend money to each other overnight, using British pounds. It reflects the cost of very short-term borrowing and is based on actual transactions, making it a reliable benchmark for financial activities. SONIA influences financial markets, interest rates on loans, and financial contracts, helping to ensure transparency and stability in the UK’s financial system. Essentially, it’s a daily indicator of the baseline cost for banks to borrow funds overnight in British pounds.