strsubcodechain Interest Rates - Data and Methods
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Subjects > Interest Rates

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Subject: Interest Rates

Direct source
In nearly all instances, data are provided by the national central bank.

Contact person
OECD statistics contact:

Key statistical concept
Interest can be said to be the price paid by the borrower for the use of funds saved by the lender and the compensation to the lender for his deferring expenditures. This compensation comprises two elements, namely a payment equal to the loss of purchasing power of the principal during the term of the loan and a balance that represents the real interest accruing to the lender. However this simplicity does not extend into the area of rate determination since rates vary not only because of inflation, as implied above, but also because of a number of other influences, including:

- The amount, purpose and period of the transaction;

- The credit-worthiness of the borrower;

- The collateral offered and/or other guarantees/guarantors available;

- The competition for the transaction;

- Government policy.

As a consequence, there will be numerous rates applying to the large number of transactions that are in effect at any one time in any one country. While efforts have been made in the rate selection to ensure as much international comparability as possible, the fact remains that the institutional features of each member’s financial markets are distinct and often markedly different from those of other members. However, the intent is to present for each country a range of rates, from ‘overnight’ through ‘short-term’ to ‘long-term’. In general, ‘overnight’ and ‘short term’ rates relate to money market instruments, while ‘long term’ rates are secondary market yields of long term (usually 10 year) bonds.

Glossary Terms: Interest rate, Interest

Aggregation and consolidation
Monthly figures shown are calculated as the average of weighted or unweighted arithmetic rates relating to all days or specified days in the month or they refer to a day at or near month’s end. For short and long term interest rates, annual and quarterly data are normally averages of monthly figures, while for ‘overnight’ rates, annual and quarterly data usually refer to the figure for the final month of the period.

Subject: Interest Rates > 3-month or 90-day rates and yields

Key statistical concept
Short term rates are usually either the three month interbank offer rate attaching to loans given and taken amongst banks for any excess or shortage of liquidity over several months or the rate associated with Treasury bills, Certificates of Deposit or comparable instruments, each of three month maturity.

For Euro Area countries the 3-month "European Interbank Offered Rate" is used from the date the country joined the euro.

Subject: Total
Measure: Quantum (non-additive or stock figures)

Unit of measure used

Subject: Interest Rates > Long-term government bond yields

Key statistical concept
Long term (in most cases 10 year) government bonds are the instrument whose yield is used as the representative ‘interest rate’ for this area. Generally the yield is calculated at the pre-tax level and before deductions for brokerage costs and commissions and is derived from the relationship between the present market value of the bond and that at maturity, taking into account also interest payments paid through to maturity.

Subject: Main (including benchmark)
Measure: Quantum (non-additive or stock figures)

Unit of measure used

Subject: Interest Rates > Immediate rates (< 24 hrs)

Key statistical concept
Overnight or Immediate Rate here is used as a term to describe official discount rates and call-money rates. The official discount rate is the rate at which central banks make advances to, or discount eligible bills of exchange for, selected banks and other financial intermediaries. There are often strict rules regarding the quality of securities which will be accepted as collateral for the advances and regarding the eligibility of bills of exchange to be discounted. In the case of the latter, normally they must be of limited duration to maturity, commercial and not financial paper, and guaranteed by parties known to be solvent. Additionally, there are limits on the amount of credit available. Call money and day-to-day loans play a predominant role in interbank money dealings and between banks and money market dealers. Day-to-day loans usually refer to operations on the money market between banks to balance temporary surpluses and shortages of liquidity. These operations are sometimes conducted through the central bank. Call money generally refers to secured or unsecured ‘at-call’ loans made by banks to money market dealers. It is occasionally used for the flow of funds from financial institutions with an excess of their own funds and deposits (in relation to customers’ demands) to institutions with a shortage.
Glossary Terms: Short-term interest rates

Subject: Total
Measure: Quantum (non-additive or stock figures)

Unit of measure used