BBA LIBOR: Long-term Sterling rates hit record highs while short-term pressures ease

The European Central Bank’s intervention this morning to inject short-term liquidity into the market has brought overnight lending rates in the Eurozone sharply down, as indicated by the drop in overnight euro BBA LIBOR from 4.68 to 4.13125.

However, in the longer-term little effect can be seen as rates are virtually unmoved with three-month euro BBA LIBOR today setting at 4.76.

In the UK, the continuing effects of the Bank of England's actions yesterday have seen a further gentle easing of the overnight Sterling lending rate to 5.900 – only a few basis points above the levels we would expect in normal market conditions. However, the three-month Sterling BBA LIBOR rate continues its climb to a new high of 6.87 per cent (up from 6.800 yesterday). This is its highest level relative to the Bank of England base rate since the collapse of LTCM in 1998.

BBA Chief Executive Angela Knight CBE said: “The actions of central banks seem to be easing short-term rates. However, the conditions in the 3-month and longer term lending markets continue to be of concern.”