Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Are Watching the Secured Overnight Financing Rate
Episode 102 of Monetary Policy Explained with Fexingo dives into SOFR, the secured overnight financing rate that has replaced LIBOR as the benchmark for trillions in derivatives and loans. Lucas and Luna explain how SOFR is calculated from actual overnight Treasury repo transactions, why it behaves differently from the old unsecured rates, and what its recent movements imply about liquidity in the banking system. Using the June 2026 quarter-end spike in SOFR as a concrete case, they explore why central banks pay close attention to secured rates for signs of collateral scarcity and funding…
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