Finance, Forex and Investments

What rates are being referred to when we say key interest rates?

Do these rates pertain to the interest of regular savings accounts and/or other types of certificate of deposits? What does overnight lending rate mean? Banks borrow from Central Bank? Why?

Public Comments

1. Key interest rates refer to the rates at which banks borrow money from each other. These do not pertain to the regular savings account rates because those are decided by individual banks , although those are also depended on key interest rates. Banks have to maintain a certain level of cash in their reserves to meet various needs of their day to day operations. Over night lending rates and the borrowing from central bank is needed to maintain this cash balance.