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Three-Month Libor-Euribor Spread Reaches the Highest Level Since January
The difference between the rates banks pay for loans for three-months in dollars and euros widened to the most in more than six months after the European Central Bank ended part of its program to boost the economy.
The so-called spread between three-month dollar Libor and three-month Euribor widened 9 basis points today to 44 basis points, the most since Jan. 6. A 442 billion-euro ($575 billion) 12-month ECB loan to banks ended July 1.
“Euribors are pushing higher as the amount of excess liquidity in the system has been reduced since the ECB’s 12- month repo expired,” said Peter Chatwell, an interest-rate strategist at Credit Agricole Corporate & Investment Bank in London. “Dollar funding pressures are easing.”
Federal Reserve Chairman Ben S. Bernanke told lawmakers on July 21 the outlook for the U.S. economy was “unusually uncertain” and the central bank “remained prepared to take further policy actions” to foster the recovery.
The London interbank offered rate, or Libor, for three- month loans in dollars dropped to 0.454 percent today, the lowest since May 14, according to the British Bankers’ Association.
The euro interbank offered rate, or Euribor, for three- month loans, fell to 0.896 percent, according to the European Banking Federation. That’s the first decline since April 20. It was at 0.899 yesterday, the highest level in a year.
To contact the reporter on this story: Keith Jenkins in London at kjenkins3@bloomberg.net
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