An interest rate benchmark that reflects the cost of borrowing in the interbank market (interbank funding costs). It measures the cost of borrowing short-term money using Treasuries or other debt securities as collateral.

It is an overnight interest rate that is set by a central bank, at which to borrow money from non-bank entities (for the shortest facility periods: overnight deposits), in the specific cases where other rates are used for deposits made by bank entities. A central bank sets the overnight reverse repurchase rate (as a key policy rate), at which it may also borrow money from banks to maintain price stability in a country. This, consequently, impacts the country’s money supply as it shifts money (excess reserves) from banks into the central bank.

This rate is known as overnight reverse repurchase rate or for short as ON RRP.