Wednesday May 14, 01:35 PM
UK interbank lending rates up across most maturities
LONDON (Thomson Financial) - The key rate at which banks lend to each other rose across most maturities, as hopes that the Bank of England will deliver a rate cut next month were dampened further after it ramped up its inflation forecast.
The three-month Libor rate edged up to 5.80 percent from 5.77 percent on Tuesday.
The one-month rate rose to 5.45 from 5.43 percent, while the overnight contract, generally the most closely aligned to the Bank of England's (BoE) 5.00 percent benchmark rate, was stable at 5.09 percent.
Markets had been expecting that the central bank might cut rates by a quarter point to 4.75 percent next month, but these hopes have been quashed after the BoE warned in its quarterly Inflation Report on Wednesday that annual CPI (NYSE: CPY - news) inflation could reach near 4.00 percent by the autumn.
Expectations for a cut had already been dampened after Tuesday's CPI data showed annual CPI jumped to 3.0 percent in April, just below the level that would trigger BoE governor Mervyn King into writing a letter to the Chancellor of the Exchequer to explain why inflation is more than a percentage point above its 2.0 percent target.
|
Send Article by Email
