Short-term interest rates

Updated: Aug 20, 2021

Whereas in the money market short-term interest rates tend to be close to base rates or minimum lending rates, they can be higher in certain banking situations. Banks will often offer very high rates for large sums loaned for a fixed but short period. These rates may be very much higher than normal deposit account rates, since they are determined not by the prevalent minimum lending rate but by the fact that the monies are deposited as a loan for a fixed period, in which withdrawals are not permitted, and are in the nature of specific loans to a bank rather than being accepted as on deposit.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
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James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.