21 Oct

Libor rate fall seen as sign of growing liquidity

Libor rate fall seen as sign of growing liquidity

The fall in the London interbank offered rate (Libor) - which determines the cost of interbank lending - is showing signs of responding to recent actions taken to improve liquidity, it has been stated.

Darren Cook, a spokesman for finance website Moneyfacts.co.uk, said the Libor rate has been coming down, although it is not yet "where we should be", which he suggested was between five per cent and 5.5 per cent.

"But I think it is a good indication that there is some liquidity coming back," he added.

Mr Cook said the key now was for lenders to start passing on these falls to consumers, since they had used increases in Libor to justify raising mortgage costs.

He concluded: "Hopefully we will see these margins reduce in the short term."

The latest three-month Libor rate, which is jointly produced by the British Bankers Association and Reuters, stands at 6.085 per cent, compared with 6.16 per cent on October 17th.

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