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UK interbank borrowing rates remain level

Monday, January 28, 2008

LONDON (Thomson Financial) - The rates at which banks lend to each other in the UK stayed flat today, continuing a period of recovery following the soaring rates seen in the autumn.

The three-month London Interbank Offered Rate (Libor) -- a key indication of banks' willingness to lend to each other over the medium term -- was unchanged at 5.58 pct.

The overnight rate, generally the closest aligned to the Bank of England's (BoE) 5.50 pct Bank rate, edged up to 5.54 pct from 5.53 pct, and the one-month rate was flat at 5.56 pct.

These rates are far lower than the levels they hit in September when fears surrounding the run on Northern Rock hit fever pitch. Then, the three-month sterling Libor rate touched 6.90 pct, more than 100 basis points above the BoE benchmark rate.

The BoE is widely expected to cut its benchmark rate by a quarter point to 5.25 pct on Feb 7, although the prospect for further cuts could limited because some Monetary Policy Committee members are concerned about ongoing inflationary pressures.

Posted by MOHAMED SAID at 5:37 AM  


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