On December 7th, the Bank of Canada (BoC) raised overnight interest rate by 50 basis points to 4.25%, resulting in Prime Rate of 6.45%. So why are the interest rates offered by the banks much higher than those set by the Bank of Canada? Let's start by explaining what an Overnight Interest Rate is. The overnight interest rate is the interest rate banks charge each other to cover their short-term daily transactions. The Bank of Canada sets the target for the overnight rate, a... [read more]