Banks Welcome Government Action

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Moves to support the banking industry and to inject liquidity into the money markets were welcomed by the UK's leading banks as they acted to cut interest rates on mortgages and loans.

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Re: Banks Welcome Government Action

From Times Online

November 6, 2008
Libor slides ahead of surprise rate cut


Rosie Lavan

div#related-article-links p a, div#related-article-links p a:visited { color:#06c; } The rate at which banks lend to each other fell today ahead of the shock 1.5 per cent cut in interest rates announced by the Bank of England at lunchtime.
Figures released minutes before the Bank's decision showed that the overnight sterling Libor rate dropped 50 basis points, to 4 per cent.
Three-month sterling Libor, the measure used to price loans in the UK, was also down. It fell 0.11875 per cent to 5.56125 per cent. However, this is more than 2.5 per cent higher than the base rate, which the Bank of England cut today to a 54-year low of 3 per cent. It has not yet been announced which banks will pass on the rate cut to their customers, but earlier this week Lord Mandelson, the Business Secretary, strongly rebuked British banks for failing to help customers with reduced borrowing costs.
Three-month dollar Libor fell by the same amount as sterling, to 2.3875 per cent, but the overnight cost of borrowing dollars showed a slight increase, up 0.005 per cent to 0.32750 per cent.
Related Links

• Bank of England cuts rate by 1.5 points

• Banks to defy Government and raise mortgages rates

• Fed cuts rates to 1% to avert recession

The cost of borrowing euros slid: the three-month rate was down 0.06 per cent to 4.59625 per cent, and the overnight rate fell to 3.4625 per cent. The European Central Bank also cut interest rates today, by 0.5 per cent to 3.25 per cent.
The central bank action in Europe follows another decisive move from the US Federal Reserve, which last week brought rates down to 1 per cent, preparing the ground for further unprecedented cuts.