The Bank of Canada has raised its overnight rate five times in little over a year.
The overnight rate now stands at 2.0%, down from 5.25% when the easy-money spree began.
The effect has been most dramatic in the overnight rate for borrowing dollars.
ECONOMIST: When banks find it hard to borrow, so do the rest of us
The overnight rate now stands at 2.5%, its lowest level in 39 years, and Greenspan is running out of bullets.
The overnight rate tumbled to 1.93 percent from 2.13 percent on Wednesday.
The FOMC has its hands on only the shortest of short-term interest rates the overnight rate at which banks can borrow federal funds.
Since it moved to unlimited fixed-rate funding, the central bank has been content to allow the overnight rate to drift much lower than the policy rate.
Trading in federal funds futures indicated an 84.0% chance that the central bank would cut its overnight rate target to 1.25% on Oct. 29, following its half-point reduction on Wednesday.
Demand, so far, has been low, because of the stigma for any bank that uses the system, and the cost: 100 basis points more than a benchmark overnight rate.
Even if the overnight rate is close to zero, the Committee should be able to influence longer-term interest rates by informing the public's expectations about the future course of monetary policy.
Since the unsecured overnight rate has been the principal policy lever for central banks, this development could, the BIS warns, make it hard for them to rein in inflation in the future.
Yet now interest rates have gone even higher (this week the central bank raised the overnight rate from just under 30% to 32%), in order to stop the floating currency from sinking out of sight.
When that point will be reached is a matter of day-to-day debate among bond traders, but Daniel Fuss, vice chairman of Loomis, figures that in 30 months the overnight rate will be about 3%, against 1% now.
The attendees, including European Central Bank head Jean Claude Trichet, are gathering just weeks after the Bernanke Fed halted a string of 17 straight interest rate increases over the last two years, holding its overnight rate to 5.25% after 17 straight increases over the last two years.
The central bank keeps its eye on an overnight rate called Eonia, which is calculated by taking a weighted average of all overnight unsecured lending transactions between a pool of 43 of the most active banks in the Eurozone, along with four other international banks.
The chances are rising for a European Central Bank rate cut from the 1% overnight rate currently, and those chances increase if the Greek election result suggests that the country is giving up on its agreement with Germany to lower its debt and cut spending.
The three-month Libor is at 3.77%, according to UBS, and the difference between that and the overnight rate suggests "interbank lending is broken, " said William O'Donnell, the head of U.S. interest rate strategy at UBS. Rather than extend credit for longer than overnight, banks appear to be hoarding cash.
In mid-August the Fed supplied enough liquidity to hold the effective federal funds rate, an overnight interbank rate, below its then target of 5.25%.
The most the ECB has done to try and encourage more lending is cut its overnight deposit rate, in other words paying less interest on money it borrows from banks overnight.
The Fed's overnight lending rate is currently 5.25%, up from 1% two years ago.
The overnight Libor rate has dropped to 1.67%, its lowest rate in four years.
On July 7, the central bank raised the overnight borrowing rate by six percentage points to 30%.
The U.S. Federal Reserve confirmed widely held expectations, announcing it will leave its overnight lending rate unchanged at 5.25%.
That has not stopped the central bank from making plans to raise its key unsecured overnight call rate to 0.5%.
The Fed slashed its overnight lending rate 50 points, to 1%, as expected on Wednesday, its lowest level since June 2003.
Look for the overnight target rate to double, to 2%, in 2011.
There was no surprise to see that the BoJ has left its AP program and its overnight target rate unchanged last night.
Since the overnight interbank rate is between 40% and 50%, and industry is crippled by the liquidity crunch, this is a siren song.
Yet again on Friday, the difference between the overnight lending rate and the 3-month interbank lending rate remained above 200 points, indicating this stress in the credit markets.
In the current money market conditions, where banks have to approach the central bank for borrowing, the overnight lending rate is in fact the key operational policy rate.
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