SONIA Compounded Index
IUDZOS2 • Economic Data from Federal Reserve Economic Data (FRED)
Latest Value
116.25
Year-over-Year Change
0.21%
Date Range
10/6/2021 - 8/5/2025
Summary
The SONIA Compounded Index tracks the daily compounded Sterling Overnight Index Average, providing a critical benchmark for financial markets and interest rate calculations. This index represents the risk-free reference rate for sterling-denominated financial instruments and derivatives.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
The index aggregates overnight interest rates across the British financial system, offering a comprehensive view of short-term lending costs and market liquidity. Economists and financial professionals use this metric to assess monetary policy effectiveness and market sentiment.
Methodology
The index is calculated by compounding daily overnight interest rates, reflecting the actual returns earned by market participants over a specified period.
Historical Context
Central banks and financial institutions utilize this index for pricing complex financial products, risk management, and understanding short-term lending dynamics.
Key Facts
- Represents the risk-free reference rate for sterling-denominated financial instruments
- Compounded daily to reflect actual market returns
- Critical for pricing derivatives and financial products
FAQs
Q: What does SONIA stand for?
A: SONIA stands for Sterling Overnight Index Average, representing the effective overnight interest rate in the British financial market.
Q: How is the SONIA Compounded Index different from other interest rate measures?
A: Unlike simple interest rates, the SONIA Compounded Index calculates returns by compounding daily rates, providing a more accurate representation of actual market performance.
Q: Who uses the SONIA Compounded Index?
A: Financial institutions, central banks, traders, and risk managers use this index for pricing financial products, assessing market conditions, and managing interest rate exposures.
Q: How frequently is the SONIA Compounded Index updated?
A: The index is typically updated daily, reflecting the most recent overnight lending rates and market conditions.
Q: What are the limitations of the SONIA Compounded Index?
A: The index is specific to sterling markets and may not directly translate to other currency or global financial environments, requiring careful contextual interpretation.
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Related Trends
Daily Sterling Overnight Index Average (SONIA) Rate: 75th percentile
IUDZLS8
Daily Sterling Overnight Index Average (SONIA) Rate: 90th percentile
IUDZLS9
Daily Sterling Overnight Index Average (SONIA) Rate: 10th percentile
IUDZLS6
Daily Sterling Overnight Index Average (SONIA) Rate: 25th percentile
IUDZLS7
Daily Sterling Overnight Index Average (SONIA) Rate Total Nominal Value
IUDZLT2
Daily Sterling Overnight Index Average (SONIA) Rate
IUDSOIA
Citation
U.S. Federal Reserve, SONIA Compounded Index [IUDZOS2], retrieved from FRED.
Last Checked: 8/1/2025