SONIA interest rate benchmark

The Bank of England runs SONIA – the risk-free rate for sterling markets.

Overview

SONIA (Sterling Overnight Index Average) is an important

We are the administrator for SONIA. That means we take responsibility for its governance and publication every London business day.

SONIA is based on actual transactions and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions and other institutional investors.

Financial businesses and institutions use SONIA in a variety of ways. For example, to calculate the interest paid on transactions and sterling  . SONIA is used to value around £30 trillion of assets each year. 

SONIA is the Working Group on Sterling Risk Free Reference Rates’ preferred benchmark for the transition to sterling risk-free rates from Libor.

Our Monetary Policy Committee decides what monetary policy action we take as a central bank. We implement our monetary policy by taking an active role in the financial markets using our Sterling Monetary Framework. SONIA has an important role in measuring how effective that implementation is.     

SONIA was introduced in March 1997. We took responsibility for it in 2016 and, after consultation, we reformed it in 2018. The way we run SONIA complies with international best practice for financial benchmarks.  

To support the Risk-Free Rate transition in sterling markets we began publishing the SONIA Compounded Index from 3 August 2020. This simplifies the calculation of compounded interest rates and in doing so provides a standardised basis through its publication as an official source.

How we produce SONIA

We gather data

Banks send us details of all their transactions from the previous day by 7am.

We check the data is right

We check the data is in the right format and run plausibility checks to make sure the data we have makes sense.

We calculate SONIA

We calculate SONIA and other statistics we need.

We publish it

For more information, see our overview of how we run SONIA.

For information on the calculation methodology for SONIA and the SONIA Compounded Index, see our key features and policies.

If you have any queries about SONIA, please email benchmarkadministration@bankofengland.co.uk.

If you have any queries about sterling risk-free rates transition, please email RFR.Secretariat@bankofengland.co.uk.

Historical data 

SONIA and the SONIA Compounded Index are freely available on our Interactive Statistical Database by 10am on the business day after it is first published. The database also includes historic data. 

To support transparency of the benchmark calculation process, we publish summary information on errors that did not meet our republication criteria. 

This page was last updated 26 November 2020

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