A key gauge of inter-bank borrowing costs has declined for six consecutive weeks, the longest such streak since 2013, prompted by expectations the US Federal Reserve will refrain from raising interest rates in 2019. Signs of softening domestic growth, together with muted inflation and ongoing trade tensions between China and United States, have supported the view the Fed's rate-hike campaign may have come to an end.
The London inter-bank offered rate (LIBOR) to borrow dollars for three months on Friday slipped 1.1 basis points to 2.68288 percent, the lowest since Nov. 21. On the week, LIBOR has moved in a choppy fashion, falling 1.5 basis points. 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 Fed's 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.