Open-Market Rate


DEFINITION of 'Open-Market Rate'

Rate of interest that is paid on any debt security that trades in the open market. Open-market rates respond directly to changes in supply and demand. Interest rates for such debt instruments as commercial paper and banker's acceptances are open-market rates.

BREAKING DOWN 'Open-Market Rate'

Open-market rates differ from the discount rate and other official rates that are set by the Federal Reserve. These rates apply to any debt instrument that trades in the secondary market. Bank commercial-loan rates do not fall into this category, as they are largely determined by Fed policy.

  1. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. Banker's Acceptance - BA

    A short-term debt instrument issued by a firm that is guaranteed ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, ...
  6. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
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