Tuesday April 29, 12:42 PM
UK interbank lending rates mostly lower
LONDON (Thomson Financial) - The rates at which banks lend to each other in the United Kingdom were mostly lower, although not by much, as liquidity in the banking sector remains tight.
The key three-month Libor rate edged down to
5.86 percent from 5.87 percent on Monday.
The one-month rate, meanwhile, fell to 5.48 percent from 5.49 percent, while the overnight contract, generally the most closely aligned to the BoE's 5.00 percent benchmark rate, rose to 5.10 percent from 5.06 percent.
Last week the Bank of England announced a plan whereby it would swap mortgage-based assets in exchange for government bonds. These could then be used for interbank lending, to improve credit markets and to fund mortgage lending.
The success of the plan is linked to the three-month Libor rate, which in part determines the cost of the swap agreements for banks.
Analysts have warned that because the swaps are still relatively expensive for banks, the improvements to liquidity may be slow to emerge.
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