The London InterBank Offered Rate (LIBOR)

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   Chart: U.S. Prime Rate vs. Fed Funds Target Rate vs. 1-Month LIBOR vs. 3-Month LIBOR


LIBOR

The London InterBank Offered Rate, or LIBOR, is the average interest rate at which a select group of large, reputable banks that participate in the London interbank money market can borrow unsecured funds from other banks. There are many different LIBOR rates (maturities range from overnight to 12 months) for numerous currencies, including U.S. dollars. In the United States, the most common LIBOR maturities used in pricing loans -- 1, 3, 6 and 12 months -- can be found below.

Back in the mid-1980's, the world banking system adopted the LIBOR as a much needed benchmark for short-term, interbank loans. The LIBOR rates are now internationally recognized indexes used for pricing many types of consumer and corporate loans, debt instruments and debt securities across the globe. For example, LIBOR is used as an index for a large percentage of adjustable-rate mortgages (ARM) in The United States.

LIBOR rates are fixed every UK business day by the global media corporation Thomson Reuters, in association with the British Bankers' Association (BBA), a nonprofit trade association.

The Fed Funds Target Rate, America's benchmark interest rate, and the U.S. Prime Rate are controlled by America's central bank: the U.S. Federal Reserve. LIBOR rates, however, are not controlled by England's central bank, or any other central bank for that matter. Scroll down this page to read about how LIBOR is fixed.
Current LIBOR Rates§
Maturity Rate (%)
One-Month LIBOR 0.157
Three-Month LIBOR 0.23075
Six-Month LIBOR 0.32315
Twelve-Month LIBOR 0.54465





The above-listed LIBOR rates were updated on October 16, 2014±.
Source: WSJ
The Current Prime Rate 3.25%
The Current
Target Range for
the Fed Funds Rate
0% - 0.25%

Chart: U.S. Prime Rate vs. Fed Funds Target Rate
vs. 1-Month LIBOR vs. 3-Month LIBOR


How U.S. Dollar (Eurodollar) LIBOR Works

How does the BBA (and Thomson Reuters) fix LIBOR rates denominated in U.S. dollars? Just before 11:00 a.m. GMT, it polls a specific panel of highly reputable, high-volume banks which participate in the London wholesale money market. The BBA finds out the rate at which each bank on the panel could borrow Eurodollars from other banks, for specific maturities. The BBA figures out the central tendency -- the interquartile mean -- for each maturity, then publishes these rates at about 11:30 a.m. GMT. The American banks included in the panel surveyed by the BBA for U.S. dollar fixing are:

  • The Bank of America
  • JP Morgan Chase
  • Citibank, NA

There are 15 non-U.S. banks surveyed for U.S. dollar fixing in London. These banks are:

  • Bank of Tokyo-Mitsubishi UFJ Ltd
  • Barclays Bank plc
  • BNP Paribas
  • Credit Agricole CIB
  • Credit Suisse
  • Deutsche Bank AG
  • HSBC
  • Lloyds TSB Bank plc
  • Rabobank
  • Royal Bank of Canada
  • Société Générale
  • Sumitomo Mitsui Banking Corporation
  • The Norinchukin Bank
  • The Royal Bank of Scotland Group
  • UBS AG
For more on how LIBOR works, click here.

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± = The table below lists bank holidays in the United Kingdom. There will be no updates for the above-listed LIBOR rates on these days:
Bank Holidays In The UK: 2014
New Year's Day
January 1
Good Friday
April 18
Easter Monday
April 21
Early May Bank Holiday
May 5
Spring Bank Holiday
May 26
Summer Bank Holiday
August 25
Christmas Day
December 25
Boxing Day
December 26

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