SONIA

The Sterling Overnight Index Average (SONIA) is the effective overnight interest rate that banks pay to borrow sterling overnight from other financial institutions. It’s used for overnight funding of trades that occur in off-hours and indicates the depth of business in the marketplace in these hours. SONIA is calculated using data from banks across the UK on any transactions completed in the previous trading day. The BoE filters out unusual patterns and calculates a weighted average of all transactions over £25 million. The top and bottom 25% are removed, and a mean is taken from the middle 50%. This is rounded to the nearest four decimal places, which is the SONIA rate.