A key barometer of interbank borrowing costs increased on Friday to its highest level in about 2-1/2 weeks, partly in anticipation of US quarterly corporate tax payments in three months. The London interbank offered rate (LIBOR) to borrow dollars for three months rose 1.06 basis points to 2.62525 percent, reaching its highest level since Feb. 27. Three-month LIBOR has risen for three straight sessions, matching a streak last seen in mid-December.
LIBOR is the benchmark rate for $200 trillion worth of dollar-denominated financial products, mainly interest rate swaps and floating-rate loans. In December, LIBOR reached its highest in more than decade at 2.82375 percent, propelled by US Federal Reserve interest rate increases, rising US government borrowing and a shrinking Fed balance sheet.
In late January, the Fed said it would be "patient" before ratcheting key lending rates higher. Fed Chairman Jerome Powell said the case for rate increases had "weakened" in recent weeks. The US central bank also signaled it was prepared to adjust the normalization of its balance sheet.
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