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Euro LIBOR Hits Historic Low |
January 29, 2010
According to London South East, Three-Month Euro LIBOR has reached an historic low. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
At press time, Three-Month LIBOR was 0.61000%, a decline from the previous day’s mark of 0.61125%. The promise of continued liquidity in European financial markets prompted the decline. The European Central Bank (ECB) has announced a reduction in the liquidity programs it has used to bolster the economy; however, it has promised “unlimited funds” through Q1 2010. Additional, worries about Greece’s ability to service its debt load may further slow any ECB reversal of cash infusions.
LIBORATED.com has reported on LIBOR’s relationship to central bank actions. Financial institutions approve of interventionist policies that keep rates low and increase liquidity. These institutions express their approval and resultant optimism in lower interbank rates, which are represented in lower LIBOR rates.