Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
|
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Dollar LIBOR Reaches Yet Another Low |
September 10, 2009
According to CNNMoney.com, a key LIBOR index measured in US Dollars has reached an historic new low. 3-Month Dollar LIBOR hit 0.269869%, the first time this particular index has fallen below 3% since the British Bankers’ Association (BBA) began compiling LIBOR in 1986. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
3-Month Dollar LIBOR holds particular significance since it is the LIBOR benchmark used in the LIBOR-OIS Spread and the TED Spread, two comparative indices used to measure banks’ willingness to lend. The LIBOR-OIS Spread compares 3-Month LIBOR to an anticipated monthly average of federal funds rates. The TED Spread compares 3-Month LIBOR to 3-Month Treasuries, essential juxtaposing the costs banks pay for borrowing on 3-month notes versus rates the US Government pays. In both spreads, the closer LIBOR stays to the government-based companion index, the smaller the measured gap, indicating more market confidence and greater liquidity.
Experts consider record low LIBOR figures as banks’ affirmation of Federal Reserve policies to bolster the economy through historically low interest rates and bond purchases that have injected cash into the financial system.