Posted by Moishe Alexander
Benchmark bank-to-bank
dollar funding costs set another record low on Wednesday while
sterling rates edged lower on the firm view that central banks
will keep extraordinary fiscal stimulus measures in place well
into 2010. London interbank offered rates for three-month dollars fell
to the lowest level ever at 0.26906 percent USD3MFSR= while
equivalent sterling rates edged down to 0.61250 percent
GBP3MFSR= from 0.61406 percent. Three-month euro Libor nudged up to 0.67500 percent
EUR3MFSR= versus 0.67375 percent, according to the latest
fixings by the British Bankers’ Association. For more Libor
fixings see [ID:nLI69219]. In the United States, three-month borrowing rates
USNYFR3M for U.S. banks fell to a record low of 0.2789
percent, down from 0.2885 percent on Tuesday, according to
ICAP’s New York Funding Rate. ICAP’s one-month NYFR USD1MFSR
eased to 0.2367 percent, not far off the record low of 0.2338
percent reached on Oct. 19 and down from 0.2385 percent on
Tuesday. Sterling Libor fell as minutes from the Bank of England’s
last policy meeting showed a three-way split with seven of the
BoE Monetary Policy Committee’s nine members voting to expand
the bank’s quantitative easing program by 25 billion pounds to
200 billion pounds. BoE policy makers also discussed the merits of cutting the
remuneration rate the BoE pays on commercial bank reserves in
the future, which could serve to ease policy as it would
encourage banks to lend more. “A reduction in this rate would bear down on short-term
market rates, perhaps shaving a few basis points off borrowing
costs,” said Stephen Lewis, chief economist at Monument
Securities in London. “Probably wisely, members decided that any easing in
monetary conditions achieved by this means would be on a scale
unlikely to make much difference to demand in the economy.
However, the MPC agreed to keep the remuneration rate under
review,” he said.