Tuesday, Sep 30, 2008
Emergency official rate cut on the cards?
Bloomberg: Libor Surges Most on Record After U.S. Congress Rejects Bailout
The cost of borrowing in dollars overnight surged the most on record after the U.S. Congress rejected a $700 billion bank rescue plan, heightening concern more institutions will fail.
The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said.
Posted by lukeskywalker @ 02:07 PM (261 views) Add Comment
1 Comment
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1. planning4acrash said...
The liquidity injections ARE emergency rate cuts. They have two main purposes: a) nepotism b) to increase liquidity so that banks don't need to borrow from each other, thus reducing demand for interbank loans, therefore reducing LIBOR and the cost of borrowing, thus, the cost of money.
Of course, the cost is inflation, for the rest of us, but government don't care about that!