The
overnight market is the component of the
money market involving the shortest term
loan.
Lenders agree to lend
borrowers funds only "overnight" i.e. the borrower must repay the borrowed funds plus
interest at the start of business the next day. Given the short period of the loan, the interest rate charged in the overnight market, known as the
overnight rate is, generally speaking, the lowest rate at which
banks lend money.