Bank-to-bank lending eases
« Thread Started on Dec 4, 2008, 9:15pm »

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Bank-to-bank lending eases
Posted: 12:01 PM ET
NEW YORK (CNNMoney.com) — Bank to bank lending rates continued to march
lower, as a trio of European central banks slashed their key interest rates, a
move that markets had largely expected.

However, exceptionally low government debt yields show that investors
fueled by fear of the volatility in global stock markets were still flocking to
Treasurys.

Government debt prices were mixed Thursday, but even as debt prices
churned, they remained near record high levels, and yields were at record lows.

The 3-month Libor rate fell for the third day in a row Thursday to 2.19
percent from 2.20 percent Wednesday, according to Bloomberg.com. The three
month bank-to-bank lending rate has fallen 0.01 percent each day since Monday,
when the rate sat at 2.22 percent.

The overnight Libor rate fell for the fourth day in a row Thursday to
0.52 percent from 0.88 percent Wednesday. The overnight lending rate was at
1.16 percent Friday.

Libor, the London Interbank Offered Rate, is a daily average of what 16
different banks charge other banks to lend money in London, and is used to
calculate adjustable-rate mortgages. More than $350 trillion in assets are tied
to Libor.