SOFR
Updated
What it is
SOFR, the Secured Overnight Financing Rate, is a broad measure of the cost of borrowing cash overnight on a fully collateralized basis using US Treasury securities as collateral in the repo market. It is published by the Federal Reserve Bank of New York each business day at approximately 8:00 a.m. Eastern time, calculated from actual tri-party and bilateral Treasury repo transaction data. The Alternative Reference Rates Committee, convened by the Federal Reserve, identified SOFR in June 2017 as its preferred replacement for USD LIBOR for derivatives and later for loans, since it is a fully transaction-based rate rather than a survey-based one.
Why it matters lately
The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%-4.00% on September 16, 2026, its first hike since 2023, in a unanimous 12-0 FOMC vote under Chair Kevin Warsh, who cited a strong labor market, elevated summer inflation, and an ongoing energy shock from the Iran war. SOFR averaged 3.66% through September 2026 as the overnight repo market reflected prevailing Fed policy.
Asymmetric Analytics view
Inference (AA): As the standard USD reference rate, this node is the baseline AA uses across playbooks whenever a floating-rate or funding-cost calculation requires an observable, transaction-based short-term interest rate.