Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
|
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Sterling LIBOR Hits Historic Low
3-Month LIBOR based on British currency drops in favorable response to latest central bank action
August 7, 2009
Reuters reports that the 3-Month Sterling LIBOR has dropped to its lowest level in history. The new figure is seen as the financial industry’s vote of confidence in the Bank of England’s surprise move into increase its quantitative easing (QE) program by £50 billion. 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, 3-Month Sterling LIBOR had slid down a basis point to 0.85500%, its lowest since LIBOR was officially instituted in 1986. A lower LIBOR signifies banks’ increased confidence as they are willing to charge less interest to cover less perceived risk in lending money to their most trusted customers—other banks. The Bank of England’s QE program constitutes an increase in the money supply, a continuation of well-funded activism to bolster the economy. Such central bank moves in the United Kingdom, Europe and the United States have increased financial institutions’ confidence, spurring them to reduce interest rates. Record lows in LIBOR measured in Pound Sterling, the Euro, and the U.S. Dollars are the barometer of that confidence.